Increased dollar demand saw the Uganda shilling edge lower against the U.S. unit on Thursday.
The home unit was down 5 shillings, with the USDUGX currency pair closing the day at the upper range of the recently established 3705/3725 farrow, on the back of increased activity on the foreign currency demand counter.
We see competing forces taking centre stage in the local FX market, limiting the movement of the local unit against the greenback within familiar ranges.
The dollar was the star of the day on Thursday gaining sharply against a basket of currencies following markets discontent with European Central Bank stimulus measures.
Introduction of $ 1.5 trillion repo operations by Federal Reserve of New York with $ 500bn 3-month repo operation offered on Thursday further supported dollar strength.
The single currency weakened against the dollar after the unveiling of the stimulus package rolled out by the ECB.
As part of the measures, ECB will provide banks with loans at a rate as low as -0.75% and increase bond purchases by €120 BN this year. The interest rate and deposit rate remained unchanged at 0% and -0.5% respectively.
Amid broad risk aversion, due to the coronavirus (COVID19) woes, cable marked its worst one-day loss against the dollar since July 2016 to trade near the lowest level in five months.