15 February 2013

Uganda: Shilling Remains Firm Versus U.S. Dollar

Forex experts said that the Ugandan shilling traded firmly over the week ending Feb. 15 holding on the upside with a narrow bid-ask spread.

Stephen Kaboyo, the managing director of Alpha Capital Partners said the shilling was supported mainly by BOU's open market operations, keeping a tight lid on liquidity in the money markets.

"Corporate demand was weak as most players were settling mid month tax obligations," Kaboyo said, adding demand from importers was equally weak with market indications pointing to thin demand ahead of Kenya elections as importers choose to wait and see.

He said the central bank is likely to continue with its grip on liquidity by rolling over maturities in excess of sh250 billion next week.

"This coupled with the projected low appetite for dollars will lend support to the shilling," he said.

He said in the coming days further strength of the shilling is envisaged underpinned by tight liquidity and lackluster market activity. Trading range is expected to be 2630/2660.

Standard Chartered Bank - Financial Markets department said they expect the shilling to hold in the current range as end month conversions go through.

The department said yields on treasuries are expected to firm in the mid week auction due to the excess liquidity in the near end of the curve. The bank expects a trading range of 2625-50 next week.

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