Shilling closes week narrowly weaker

It was quiet trading during Friday’s session as expected with the shilling opening trading at the 3805/3815 levels and closing at the 3810/3820 levels, still within a narrow range, a report by Absa bank indicates.

The report pointed out that the Money Markets were fairly liquid on Friday with overnight yields at averages of 10.35%.

The narrative was the same throughout the week with the shilling oscillating within a narrow range between 3800 – 3830 with some pockets of demand seen from Corporates, but these were balanced by inflows from NGOs and Exporters. Looking ahead, anticipation is for range bound trading within the 3780 -3870 levels unless activity picks up significantly on either the supply or demand side.

Money Markets were fairly liquid during the week with overnight yields trading within the 9.00% -10.00% levels. Bank of Uganda held a UGX 285 billion Treasury Bill auction and yields in the 91-day, 182-day and 364-day tenors cleared at averages of 9.310%, 11.831% and 14.002% respectively.

The Kenya shilling got some marginal reprieve during Thursday’s session as the Central Bank sold some dollars and as dollar flows filtered through the market. However, the demand side remains active due to a backlog of payments during the election period. The currency is anticipated to maintain trading within the 120.00 -126.50 trading range with expectation of a gradual narrowing of spreads as liquidity improves. William Ruto was sworn in as the president of Kenya. 

The dollar was strong during Thursday’s session, backed by favourable data releases of jobless claims and retail sales data.

The Euro was weak during Thursday’s session due to disappointing industrial production numbers and an improved dollar performance. The euro touched highs of $1.0018 and later closed the session at $0.9996.

The Sterling traded under pressure on Thursday, touching lows of $1.1416 intraday, before ending the session at $1.1472. Bank of England postponed its key rate decision following the death of Queen Elizabeth II. 

Oil prices retreated as markets start to price in a slowdown in economic activity as global demand especially from Asia also slows down and as market also prices in another aggressive rate hike by the Fed. Brent Crude traded at $90.87 a barrel and West Texas Intermediate traded at $84.89 a barrel.

Gold traded at $1655.04 having lost ground against the dollar with the increased likelihood of further rate tightening by the Fed in the near future. 

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