Forex experts say the performance of the Uganda shilling in the near term will partly depend on the market conditions in foreign economies.
Denis Mashanyu, forex trader at Standard Chartered Bank says while the risk of an extreme crisis in the Euro Zone seems to have receded for now, a continued rise in the Euro could be negative for the Euro Zone’s economy and that is one reason to be cautious about the single currency’s outlook.
“The local market will wait to see how the events in the global markets filter through,” Mashanyu said adding, whether we will see renewed investor interest with yields in the U.S. expected to remain low until 2015.
He said the shilling is expected to get some relief on the general weakness of the US dollar across the board.
For Uganda, the shilling is expected to trade in the range of 2490-2520 this week.
Treasuries are expected to keep firming in the midweek auction as onshore investors’ risk appetite remains strong ahead of the expected further easing by the policy markers.
Last week the shilling remained range-bound trading in the 2495-2510.
“General market sentiments of a weaker shilling continue to linger though the drop will be gradual,” he said.
On the global scene, the US Dollar hit a four- month low against a basket of major currencies at the end of last week, extending its losses after the US Federal Reserve announced a new round of aggressive monetary stimulus to promote U.S. job creation, investment and consumption.