Shilling slide expected to go on
Mar 02, 2015
The Uganda shilling dropped close to 1% against the dollar in the week, trading a few points off the record level of 2905 closing 2885/95 compared to the previous level 2865/75.
The Uganda shilling dropped close to 1% against the dollar in the week, trading a few points off the record level of 2905 closing 2885/95 compared to the previous level 2865/75.
The market witnessed a surge in corporate demand leading to the depreciation of the local unit.
Yields on government bonds rose with 2 and 15 year issues coming in at 72 and 29 basis points higher to 16.68% and 17.4 respectively.
Appetite for long dated bonds was seen increasing in the market and the trend is expected to be maintained next week. “We expect the shilling to reverse the losses in the coming week trading in the 2875-2905 range,” a Standard Chartered report read.
A Stanbic Bank report read: “The depreciation trend is likely to prevail over the next week on account of more anticipated
dollar demand against a backdrop of relatively low dollar supply. ”
In the money markets, Bank of Uganda accepted sh190b at the Treasury bond auction where 2-year and 15-year bonds were auctioned. The 2-year interest rate increased by 0.509% to 16.684% while the 15-year interest rate increased by 1.461% to 17.407%.
The auction was over-subscribed by sh196b. In the week ahead, there will be a Treasury bill auction sized at sh175b.
RELATED STORIES:
Uganda shilling to slide further