The Uganda shilling was relatively stable in the early part of last week with the market characterised by low demand and tightness in shilling liquidity amidst corporate tax payments.

Commercial banks that had maintained long dollar positions had very little choice but unwind their positions to alleviate the shilling liquidity squeeze. In the same vein, Bank of Uganda intervened by supplying liquidity in an effort to keep short-term rates under check.

This week, we are likely to see the shilling hold steady, buttressed by low demand in a square market. Supply levels remain low with trickle-in flows from exports. In the medium term, the fundamentals will rule and the outlook remains bearish. Trading levels expected in the range of 2,585/2,600.

Stephen Kaboyo is the Managing Director of Alpha Capital