Ugandan shilling strengthens, helped by export inflows

FINANCE     CURRENCY

 

 

Trading during the week ended 21 June 2019 was in the range of 3690/3700 compared to Monday opening levels of 3715/3725.

 

In the money market, overnight funds were priced at an average of 6% while one-week funds were priced at 9%.

 

By the close of business on Friday, commercial banks quoted the shilling at 3,679 / 3,689. This was stronger than the morning session of 3,683/3,693 buying and selling respectively.

 

"Forecast for the shilling indicate a stable unit as end month conversions trickle in and the market remains long on dollars," Kaboyo said.

 

On the other hand, in the regional currency markets, the Kenya shilling firmed up on the back of inflows from horticulture exports and non-governmental organizations.

 

He added that the shilling sentiment was also boosted by Central Bank of Kenya Governor Patrick Ngugi Njoroge's comments that the Central Bank had a solid war chest to manage the volatility of the currency going forward. 

 

The Kenyan shilling traded in the range of 36.13/ 36.23 buying and selling respectively.

 

In the international currency markets, the report adds that the US dollar lost ground after the Federal Reserve left the policy rate unchanged.

 

However, the Fed left the door open for rates cuts. Traders have priced in easier monetary policy as soon as July but also betting on rate cuts coming in September and December. Additional pressure on the greenback came after the benchmark 10-year yield fell to the lowest in two years.

 

 

In the fixed income market, a treasury bill auction with 175 billion on offer was held. The yield on the 91 day was flat at 9.19% while there was a marginal decline on the 182 and 364-day tenors coming out at 10.52% and 11.40% respectively.

 

Some outlier bids were rejected on the 91-day tenor, out of the 10 billion on offer; bids totaling 8.4 billion were accepted.