Uganda Shilling holds strong

The Uganda Shilling stood tall supported by sizeable dollar inflows mainly from NGOs and commodity exporters, making the supply side stronger to match the pockets of demand from the manufacturing and telecom sectors last week, a report from Alpha Capital Markets indicates.

Trading was in the range of 3735/3745. In the interbank money market, overnight funds traded at 6%, while one week funds traded at 8.5%.

However, on Monday afternoon, the shilling was trading at 3748/3758 weaker than 3739.17/3749.17 of the morning session.

In the fixed income market, BOU conducted reopening auctions for a 3-year and 15-year bonds with offer amounts of 110bn and 130bn respectively.

The 3-year bond with a coupon of 11% traded at a weighted yield of 16.790% while the 15 year bond with a coupon of 14.375%, traded at a weighted yield of 17.500%. The target amounts were realised on both tenors.

In other notable economic news, the annual headline inflation for the year ending October 2018 registered a 0.7% decline from the previous month and came out at 3%, hitting the lowest level seen since June 2018.

According to Stephen Kaboyo of Alpha Capital Partners, in the regional currency markets, the Kenya shilling held steady as end month dollar demand from oil importers fizzled out. Trading was in the range of 102.10/20.

Furthermore, in the international currency markets, the US Dollar steadied ahead of the closely watched US job report after pulling back from a 16 month high as investors cautiously moved back to riskier assets.

Meanwhile, Wall Street continued to pair the steep losses from volatile October. A strong rally saw Dow Jones surge more than 650 points during the week.

"Outlook for the Shilling indicates that unit will remain range bound with a bias towards strengthening on account seasonal inflows from charities, coffee and other commodities at this time of the year," Kaboyo said.