Shilling stable as activity slows ahead of festivities

Dec 21, 2021

Players project that the currency is still likely to remain weak within the 113.00 – 115.00 trading range in the near future.

Shilling stable as activity slows ahead of festivities

Ali Twaha
Journalist @New Vision

The Uganda shilling maintained a stable stance against the dollar underpinned by remittance flows amid subdued import demand ahead of the festivities.

The currency had weakened during the week to touch lows of 3560/3570, but continued flows led to its strengthening during Friday’s session to trade at the 3550/3560 level same as the week’s opening.

Stephen Kaboyo, the managing director at Alpha Capital Partners, said: “Outlook for the shilling indicate relative stability well into year-end supported by seasonal flows as market activity thins out during the festive season.”

Catherine Kijjagulwe, the head of trading at Absa, said: “The unit is anticipated to maintain rangebound trading as activity slows down towards the festivities with activity picking up again in preparation for the economy’s reopening towards the end of December 2021. The expected range is between 3,530-3,590 in the short term.”

The Kenya shilling remains under pressure, despite some year-end inflows. Demand remains robust with offers at levels as high as 114.50.

Players project that the currency is still likely to remain weak within the 113.00 – 115.00 trading range in the near future.

In the global markets during the week, the Federal Reserve finally announced an end to its bond-buying programme and three likely interest rate hikes in 2022 to curb inflation.

The European Central Bank concluded to leave its benchmark rate unchanged, and also wind down its pandemic era stimulus measures.

The single currency traded a high of $1.1360 and closed the day at $1.1328 on Thursday.

Bank Of England stunned market participants and hiked its interest rates by 0.25%. The currency traded to a high of $1.3374 and closed comfortably at $1.3319 on Thursday.

Despite fears of the new Omicron variant, US oil demand has risen keeping oil prices elevated West Texas Intermediate rose to $72.04 a barrel Brent Crude rose to $74.76 a barrel. Gold traded at $1807.

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