Markets

The Uganda Shilling depreciated further against U.S dollar on Friday

BY CBA

KAMPALA, Uganda–The Uganda Shilling continued its losing streak against the U.S dollar amidst sustained greenback demand from commercial banks and the energy sector at last week’s close. In what was an active day on the FX counters, the USDUGX pair found comfort at the 3710/3730 levels from 3707/3707 levels previously.

Emergent foreign currency demand from the corporate sectors and importers is likely to keep the local unit on the back foot in the near future. However, end month greenback inflows from charity organisations could be seen barring immense downslide of the shilling.

The U.S dollar gained steam on Friday, reaching a new five-month high against a basket of other major
currencies on Friday. The dollar rose throughout last week, as the U.S 10 year Treasury note hit an overnight high of 3.126% alongside positive economic data and rising inflation.

These factors boosted expectations that the Federal Reserve will increase interest rates and tighten monetary policy. Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.

The EUR/USD fell 0.23% to 1.1768 as two antiestablishment parties pledged to increase spending in a
deal to form a new coalition government. The possibility of a Eurosceptic government in Rome shakes investor confidence.

The GBP/USD pair extended its consolidative price action and remained confined in a narrow trading band near the key 1.3500 psychological mark.