Offshore investment in govt debt rises to $800m
Mr Denis Damba, the I&M Bank head of treasury
What you need to know:
- Ms Charity S. Kesiime, the country coordinator of ACI Uganda, said the main objective of such meetings was to promote a well-functioning financial market through promoting engagements between the regulator, stakeholders, and financial markets participants.
Offshore investors are returning in the securities market due to existing stability, the Financial Markets Association of Uganda has said.
The association, which is a loose setup of heads of commercial bank treasuries, said during a monthly meeting hosted by I&M Bank in Kampala last week that they were confident that the financial markets were better than they were six months ago, with holdings in securities by offshore investors rising.
Mr Denis Damba, the I&M Bank head of treasury, said the market is stabilising after volatilities of post Covid-19 and geopolitical experiences, which has seen offshore investors holdings in government securities rise to $800 million.
Offshore holdings had dropped from about $1.4 billion to around $500 million after most offshore relocated to safe havens such as US, which had hiked interest to reduce inflationary pressures.
Mr Damba said activity around the purchase of foreign currencies, especially the dollar was high in the interbank bank market, with daily turnover standing north of $100m.
This has shielded the shilling against depreciation with the unit experiencing a surge in value for over six months.
However, Mr Damaba warned that the slowdown in economic growth resulting from dampened global activity, means that the cost of credit will remain expensive.
Ms Charity S. Kesiime, the country coordinator of ACI Uganda, said the main objective of such meetings was to promote a well-functioning financial market through promoting engagements between the regulator, stakeholders, and financial markets participants.
“A well-functioning financial market is critical to the financial services sector and to growth of the economy,” she said.
Mr Benoni Okwenje, the general manager financial markets at Centenary Bank, said unlike last year when the shilling touched 3,900, this year the unit has remained stable trading in the range of 3,700 to 3,750, noting that the move by government to reduce domestic borrowing to Shs2.5 trillion from Shs5 trillion will help the private sector to access credit.
“It will lead to increased lending to the private sector. The more funding, they will access to the better,” he said.
