“The economy shrunk by 0.8% in the second quarter of the year."
The Uganda shilling held in a relatively tight range, with the market bracing for a pick-up in dollar demand from corporate players during by close of the week, a Alpha Capital Markets report indicates.
Trading was in the range of 3772/3782. In the interbank shilling market, overnight funds traded at 6% while one week funds traded at 9%.
However, by the close of business on Friday, the shilling was trading at sh3,767.63/3,777.63 slightly stronger than 3,769.88/3,779.88 that was recorded in the morning session, according to Bank of Uganda.
In the fixed income market segment, BOU held a 3-year and 10-year bond auction in amount of 100 billion and 120 billion respectively. Yields came out at 16.50% and 10 year traded at 17.20%. The auctions were oversubscribed with bid to cover ratios of 1.18 and 1.20 respectively.
Stephen Kaboyo, financial expert and market analysis noted that in the regional markets the Kenya shilling was stable and was expected to gain ground against the dollar, supported by significant flows from diaspora and horticulture. Trading was in the range of 100.60/80.
In other notable regional markets developments, the South African rand weakened to trade at 15.6 as the economy slipped into a recession.
“The economy shrunk by 0.8% in the second quarter of the year, with the contraction driven by a slowdown in agriculture, transport and trade sectors,” Kaboyo said.
In the International currency markets, the greenback eased against its peers after a report suggested that Japan would be the next country on President Trump’s radar to deal with in respect of trade issues. Markets were also keeping a keen eye on the highly anticipated US job report.
“In the coming days, the Uganda shilling is forecast to weaken, undermined by market players building positions in anticipation of stronger demand from importers as the third quarter gets closer. Importers are expected to commence placement of orders for end of year stocks,” Kaboyo added.