Shilling Bearish View Playing Out

October 2008 | Market Strategy

In line with our bearish view, the Ugandan shilling has continued to weaken in recent days, trading at a five-month low of UGX1,674/US$ at one point on October 2. Having sustained the break through key support at UGX1,645/US$, short-term resistance has been found at UGX1,660/US$. The unit is now 7.7% off its eight-year high of UGX1,560/US$ touched on June 16, but given the rapid retracement since then, we envisage resistance forming along this four-month depreciatory trendline going forward rather. We would look for a sustained break to suggest a slowing of the current weakening trend.

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