In the coming weeks, the shilling is expected to soften as typical surge in demand in the last quarter of the year gains traction as importers place Christmas and end of year orders.
The shilling traded at levels of 3720/3730 buying and selling, respectively during Friday morning's trading session, sh20 stronger from the prior week's close of 3740/3750, an absa Bank report indicates.
The shilling report pointed out that corporate demand was healthy at the start of the week but waned towards the end as dollar inflows came through from NGOs, commodity exporters and some offshores on the interbank.
Alpha Capital Partners' Stephen Kaboyo quoted the shilling at 3705/3715 at the close of the week as pressure on the shilling had eased.
"In the coming weeks, the shilling is expected to soften as typical surge in demand in the last quarter of the year gains traction as importers place Christmas and end of year orders," Kaboyo said.
Catherine Kijjaggulwe, the Absa Bank Uganda head of trading, noted that as we close the month, the shilling is likely to trade within the 3680 3750 levels as month-end flows from NGOs and other sectors come through.
Bank of Uganda held a Treasury Bill auction on Wednesday and the 91-day, 182-day and 364-day yields cleared at 7.198%, 9.203% and 12.402%, respectively.
The Monitor Policy Committee meeting held on Thursday left the Central Bank Rate unchanged at 7.00%, citing possible inflation pressures and uncertainty of the economic outlook due to the impact of COVID-19.
Bank of Uganda will hold a two-year and 10-year treasury bond auction on Wednesday, October 28.
The story on the Kenya shilling has not changed as it traded around the 110 level and is expected to remain within the 109.70-110.70 range in the short term. The IMF prediction of 119 is not far-fetched at the moment as supply remains thin on the back of healthy corporate dollar requirement.
In Tanzania, the shilling held steady as forex flows from the agricultural sector improved supply conditions. Trading was in the range of 2315/20.
The dollar inched higher at the end of a tough week on Friday, having shed almost a cent against the Euro and suffered its largest weekly drop against the yen in a month, as a measured US presidential debate left investors in a cautious mood.
"Persistent hopes that Congress might pass a stimulus package before the election and confidence that spending follows anyway, no matter who gets elected, has driven a sell-off in the bond market in anticipation of inflation and government borrowing," Kijjaggulwe said.
The sterling slipped on Thursday over Brexit outlook uncertainty, but it is up 1.2% this week and is clinging on above $1.30, thanks to hopes that Britain and the European Union can eventually reach some sort of trade deal.
According to President Vladimir Putin, Russia does not rule out the possibility that OPEC+ could extend its current 7.7 million barrels per day of production cuts into next year. As of Thursday, WTI Crude was rising by 2.25% at $40.94, and Brent Crude prices were up 2.28% at $42.70.