1 minute read
Foreign Exchange Down
4.8%
The Shilling strengthened against the dollar, trading at 3674 from 3684 at last week’s close. Uganda’s central bank kept its benchmark interest rate on hold at 10% for a second consecutive monetary policy meeting. The bank last raised by 100 basis points in October, with rates ending the year 350 basis points higher than they were at the start of 2022. Policymakers said the decision to hold rates was aimed at containing domestic demand pressure and supporting economic recovery. The bank said it expects in ation to slow to its 5% target by the end of the year despite in ation edging up to 10.4% last month. In the near term, we expect the Shilling to weaken amid continued food and energy price in ation.
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Egypt issues debut $1.5bn sukuk
The Pound depreciated against the dollar, trading at 30.60 from 30.48 at last week’s close, amid broader risk-o sentiment and a stronger dollar. Egypt this week issued its debut Islamic nance bond, or sukuk, raising $1.5bn. The three-year deal priced to yield 11%, having attracted investor demand of more than $5bn. The deal provides some relief to Egypt’s nance ministry given the country’s need to boost FX in ows and repay existing debt. We expect the Pound depreciate further in the week ahead mainly due to dollar strength.
Kenyan Shilling hits new low as FX reserves dwindle
The Shilling weakened to a fresh low against the dollar, trading at 126.15 from 125.90 at last week’s close amid increased FX demand from the oil and energy sector. The currency has now lost more than 2% of its value this year. Kenya’s foreign currency reserves also dropped to a new record low $6.88bn from $6.94bn the previous week. There are signs of recovery in FX ows: Kenya secured a $27m funding deal with the European Union to boost exports to the 27-nation bloc and strengthen the overall business environment. The government is also anticipating $3.4bn in tourism-related earnings this year as it expects tourist numbers to exceed pre-pandemic levels. In the immediate term, however, we expect the Shilling to remain under pressure as importers clamour for dollars to meet month-end obligations.
