BoU reduces money supply amidst stable shilling

The Uganda shilling has held firm since last week supported by the Central Bank mopping of excess liquidity while demand for the dollar remained low, Alpha Capital Partners Stephen Kaboyo says. The shilling is trading in the range of 3690/3600 buying and selling respectively. 

In the fixed income market, there was no primary auction for government securities.

In international currency markets, the US dollar fell, wiping off earlier gains after the Federal Reserve Bank was seen adopting a dovish tone, a stance that was seen bearish to the greenback.

The Fed also indicated that it would start winding down its bond holdings relatively soon. Markets took a view that it was not likely to see any more rate hikes for the remainder of the year.

In commodities markets, oil scored its biggest gain in a week, trading at 51.43 dollars per barrel supported by the ongoing efforts to cut production and the potential slowdown in US output.

"Shilling forecast point to mild weakening on account of a rebound in demand mainly from the energy sector. However a bit down the road the elections both in Kenya and Rwanda may have affect trading activity," Koboyo says.