Dollar dominates Ugandan, Kenyan shillings
- Written by GEOFREY SERUGO
The local unit opened the week trading relatively weaker against the dollar with huge demand from the manufacturing, energy, and telecom sectors outperforming the existing dollar inflows.
The currency closed Monday’s session trading at the 3725/3735 levels weaker than the day’s opening of 3720/3730 levels. It is anticipated that month-end dollar inflows will neutralize the existing dollar demand. In the near term, the shilling is likely to trade within the Shs 3680-3770 range.
According to Richard Nsubuga, trader, CIB Markets at Absa Bank Uganda, money markets started the week liquid with overnight yields trading within the 8.00-10.50% levels.
"We expect the central bank to mop up excess shillings from the system through open market operations during the week. The Bank of Uganda will hold a treasury bill auction on Wednesday worth Shs 185 billion. We expect decent participation from market players," said Nsubuga.
The Kenyan shilling continues to trade under pressure with importer demand still heavy, while inflows from the tea sector aren’t sufficient to satisfy the existing demand. The unit is still likely to trade within the 137.00-140.00 trading levels in the coming days.
He said the dollar index steadied around 103.3 on Tuesday morning supported by growing expectations that the federal reserve will keep interest rates higher for longer after the Fed’s Bullard hinted on the possibility of raising rates by 50 basis points this year. Relatedly, the global markets fraternity awaited updates from the debt ceiling negotiations.
Brent crude futures strengthened above $76 (Shs 283,287) per barrel on Tuesday morning, extending gains from the previous session amid an improving demand outlook and declining global supplies. According to its latest monthly report, the International Energy Agency projected that global oil demand will exceed supply by 2 million barrels per day in the second half of 2023.