Forex experts are expecting the Ugandan shilling to remain stable in the next couple of trading days with the expectation that the central bank will intervene to save the unit from depreciating against foreign currencies.
"The behavior of the shilling in the month of January does not seem to cause a lot of worries in the minds of the policy makers given that fundamentals are not supportive of a strong shilling," said Stephen Kaboyo, managing director for Alpha Capital Partners, adding it is expected that BOU is likely to intervene to manage the depreciation pressures as well as balancing liquidity levels in the system.
Last week the shilling was largely unchanged against the US dollar trading in a narrow range of 2660-70 with sizeable end month flows hitting the market. The three year bond issued by the Central Bank was well received coming in at 14.49% from 14.8% the previous auction.
The country's core inflation figures rose to 5.6% from 4.6% dampening any further easing by policy makers in the next monetary policy meeting on Feb.4, said Standard Chartered Bank in a statement.
This week, the bank said, it expects the unit to hold with support at 2655 and topside capped at 2680 with improved activity in the market.