Shilling loses ground as corporate demand piles

The Uganda Shilling was trading at 3,595.88/3,605.88 buying and selling respectively according to Bank of Uganda (BoU) data at 9am on Monday, slightly down from 3,592.71/3,602.71 at the close of business on Friday as corporate demand piled. 

Traders pointed out that demand for the Dollar from firms in the energy and manufacturing sectors as well as heightened demand from Small and Medium Enterprises (SMEs) had put pressure on the shilling.

Alpha Capital Partners Stephen Kaboyo noted that the Uganda Shilling held steady against the Dollar last week as demand and supply remained balanced due to the absence of strong corporate demand over the past few weeks.

This provided an opportunity for BoU to purchase dollars for their reserve build up with the trading in the range of 3690/3600.

In the fixed income market, a three year bond fetched a coupon of 18.625%, and a yield of 15.084%, 60 billion was on offer.

The 15 year bond coupon was 16.375% and the yield declined to 16.388 from 17.185%, with sh100b on offer. Both bonds were oversubscribed.

In the international currency markets the US Dollar faltered as markets remained nervous on the new economic agenda of the Trump administration as well the cautious Federal Reserve commentary.

In commodities market, oil prices recovered, but the market remained under pressure on US inventories and rising output, as these factors were seen to undermine OPEC efforts to control production.

"Outlook points to a range bound Shilling as end month inflows are likely to provide some level of support," Kaboyo said.