By Julius Businge
The Uganda shilling appreciated during the week that ended July 5 to trade 2575/85 from 2590/00 per US dollar after policy makers maintained the key lending rate at 11% citing inflationary pressures.
Traders said the market saw good dollar selling interest before energy and manufacturing sub-sectors’ demand squared off the flows.
“Activity in the debt market was subdued with no issuances and muted interest in the secondary market,” reads a note from Standard Chartered Bank. It adds the shilling will remain range bound biased towards a weakening trend with 2580-2620 levels key on both sides.
Stephen Kaboyo, the managing director at Alpha Capital Partners said the market outlook suggests that the shilling could be vulnerable on account of improved liquidity levels well into next week.
“Off shore interest as a source of supply of dollars to the domestic market may also be waning as global bond yields pick up,” Kaboyo said, adding trading levels are expected in the range of 2590/2600 next week.
In the securities market, Kaboyo said, there was no primary auction of government securities but there were sizable maturities that improved the shilling liquidity. He said the good liquidity levels were likely to keep the shilling gaining streak in check.
On a positive note, he added, Bank of Uganda released a tentative securities issuance calendar that revealed the long awaited plans of issuing a 15 year bond in the second quarter of the financial year.
“The markets have welcomed this development,” he said.