It was a quiet week overall with the shilling maintaining its strength, having opened at the 3690/3700 levels and appreciating to trade at the 3665/3675 levels on Friday morning.
Corporate demand was minimal during the week as clients prepared for mid-month tax remittances, while inflows remained robust throughout the week. The unit is still likely to maintain trading within a range between 3630-3730 until market activity picks up in the short term.
Money markets were liquid during the week with overnight yields trading between 7.00% – 11.00%. Bank of Uganda held a 3-year and 20-year treasury bond auction and yields cleared at averages of 13.500% and 15.000% respectively. Bank of Uganda is scheduled to hold a Shs 290 billion treasury bill auction on Wednesday, July 13.
Catherine Kijjagulwe, head of trading at Absa Bank Uganda said the Kenyan shilling remained weak as the market continued to see minimal dollar supply during the week and continued demand for dollars. Protests happened with destruction and looting of property across the capital. The Kenya shilling is projected to remain weak trading within the 140.00 – 143.50 levels.
The dollar was weak against most major currencies on Thursday as the market continued to internalize the lower 3% inflation print for June 2023 and the prospects of the Fed hiking interest rates at their coming sitting before the hiking cycle ends.
“The Euro broke through the $1.1 (Shs 4,106) level as the dollar weakened touching highs of $1.1228 (Shs 4,116) on Thursday.
The Pound closed Thursday’s session at $1.3134 (Shs 4,815) after touching highs of $1.3144 (Shs 4818). Oil prices soared during the week on the back of a weak dollar and oil disruptions in Libya and Nigeria with Brent Crude trading at $81.32 (Shs 298,133) a barrel and West Texas Intermediate at $76.83 (Shs 281,672) a barrel. Gold traded at $1956.47 (Shs 7.1 million) an ounce.
Source: The Observer
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