- Stable Trading and Government Bond Auctions
During Tuesday’s trading session, the Uganda shilling commenced at levels of 3770/3780 against the dollar. Throughout the session, dollar flows remained dominant, leading to temporary highs of 3758/3768 before settling at 3763/3773 by the session’s close.
Analysis from Absa indicates that corporate demand contributed to market activity, with sufficient inflows comfortably addressing these demands. Overnight yields averaged at 9.76% on Tuesday, indicating stability in the market. Additionally, Money Markets maintained liquidity levels as government releases entered circulation during the session.
Looking ahead, the Bank of Uganda has scheduled a treasury bond auction for June 12, 2024, featuring three- and 20-year bonds. This auction is expected to provide further insights into market sentiment and investor appetite for government securities.
The currency market’s performance on Tuesday reflects a balanced interplay between supply and demand dynamics. Despite fluctuations in dollar flows, the shilling demonstrated resilience, maintaining relatively stable trading levels throughout the session.
Analysts note that while corporate demand contributed to market activity, it was effectively met by healthy inflows, underscoring the overall stability of the currency market. Additionally, the presence of government releases injected liquidity into Money Markets, ensuring smooth operations.
Looking forward, market participants will closely monitor the upcoming treasury bond auction by the Bank of Uganda. This event serves as a key indicator of investor sentiment and market appetite for long-term government securities. Depending on the auction’s outcome, it may influence future trading patterns and currency dynamics.
Tuesday’s currency session was characterized by stability in yields, ample liquidity in Money Markets, and anticipation surrounding the upcoming treasury bond auction. Market participants remain vigilant, assessing evolving market conditions and their potential impact on currency trading.
