Shilling loses ground throughout the week
- Written by GEOFREY SERUGO
The local unit lost ground throughout the week’s session, opening the week at the 3705/3715 levels and touching lows of 3745/3755 during Thursday’s session in a turn of events.
Despite mid-month taxes, there were pockets of corporate demand coupled with offshore demand for the haven dollar after the news of the Silicon Valley Bank and Credit Suisse woes during the week.
On the other hand, inflows trickled in from NGOs and commodity exporters but were outweighed by the robust activity on the demand side. Having touched the 3750 psychological level the next level market players are looking out for is the 3800 level if activity persists on the demand side. The unit is likely to trade within the 3670–3800 levels in the near term.
Catherine Kijjagulwe, head of trading at Absa Bank Uganda said money markets were fairly liquid this week with overnight yields trading between the 8-12% levels with some days of funding pressure due to the mid-month tax remittances.
Bank of Uganda held a treasury bill auction this week and yields in the 91-day, 182-day and 364-day tenors cleared at averages of 10.384%, 10.512% and 13.003% respectively. Bank of Uganda is scheduled to hold a 3-year and 15-year treasury bond auction on Wednesday 22nd March 2023.
The Kenyan government officially announced a syndicated programme in which oil companies will pay for imported oil in Kenya shillings due to the dollar scarcity and also reduce the pressure on the local unit.
She said local oil companies will pay for oil imported on credit through a government-to-government deal in Kenya shillings to ease pressure on the local currency that continues to hit new record lows every week. There were some inflows from the tea sector during the week but overall the currency remained weak and traded at lows of 140.00 against the dollar. The expectation is for trading within the 129.50 -139.50 levels.
The European Central Bank hiked interest rates by 0.50% putting the benchmark rate at 3.50%. The Euro ended Thursday’s session at $1.0605 (Shs 3970) having appreciated from lows of $1.0514 (Shs 3936) on Wednesday.
The Pound touched highs of $1.2128 (Shs 4540) on Thursday and closed at $1.2107 (Shs 4532). The market anticipates that the Bank of England is also likely to hike interest rates to tame inflation.
Brent Crude traded at $75.39 (Shs 282,233) a barrel and West Texas Intermediate traded at $69.04 (Shs 258,461) a barrel lower than the previous week due to the banking crisis that is feared to spread and trigger a slowdown in the economy impacting oil demand. Gold traded at $1929.56 (Shs 7.2m) an ounce.
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