Shilling holds strong against the dollar

BANKING

The Uganda shilling held steady with a bias towards mild appreciation on matched demand and supply amid tight liquidity conditions at the end of last week, Alpha Capital Markets report indicates.

In the interbank shilling market overnight funds traded at 6% while one week funds traded  at 9%.  The shilling trading range was in the range of 3720/30.

By the close of business last Friday, the unit was in the range of 3,690/3,700 buying and selling respectively, compared to the opening session of 3,695.38/3,705.38.

Traders noted that the shilling held strong against the dollar on Friday due to offshore inflows.

In fixed income market, there was no primary auction. Trading was confined only in the secondary market.

"Forecast for the shilling indicate range bound trading as the market players square positions ahead of the festive season coupled with  larger than usual diaspora remittances," Stephen Kaboyo, a financial analyst said.

In the regional markets, the Kenya shilling, the currency of Uganda's key trading partner held its ground supported by strong inflows from diaspora remittances. The Kenyan shilling was trading in the range 102.50/70.

In the International currency markets, the US dollar edged higher before a widely expected US interest rate hike but its gains were limited by growing expectations that the Federal Reserve may express a more cautious view on future rate rises.

The pound sterling rebounded from a 20 month low as markets remained optimistic that the UK Prime Minister would survive a no confidence vote on her leadership and salvage a deal for Britain to exit the EU.