The Uganda shilling remained relatively stable during the week despite the bleep early in the week as a result of offshore investors presence in the market on the buy side coupled with the Central bank daily purchase.
Trading was in a narrow range of 2580/90.
In the coming days, the shilling is expected to hold steady at the current levels as markets await policy guidance from the Central bank on Tuesday.
BoU CBR action:
The inflation print that indicated a significant jump to 7.3 per cent, which is out of the target range, did not come as a surprise. BOU, in the previous statement, pointed to macroeconomic risks, particularly inflation risks on account of the dry spell. This scenario may stoke expectations of a rate hike.
However given the fragile nature of the economy, growth not as strong, weak exports, slackened domestic demand, pressure from businesses to ease rates further to spur economic activity, BOU may stay the course. In times like this, the mandate of the central bank will not only be price stability but go beyond in the large realm of things and take growth as the central bank top target.
Stephen Kaboyo is the Managing Director at Alpha Capital