The local foreign exchange market experienced calm on Thursday with the Uganda shilling trading within a narrow band against the U.S. unit.
Paltry dollar inflows just about matched demand for foreign currency from the corporate sector and left the USDUGX currency pair a mere 3 shillings higher by the closing bell.
The pair is likely to trade within the latest trading range albeit with a bearish tinge as we anticipate end month activity to gradually pick up on the foreign currency demand counter.
The dollar held gains against major currencies as worries about renewed diplomatic tensions between the United States and China supported safe-haven demand for the greenback.
Sino-U.S. relations have soured yet again over a broad range of issues, including China’s treatment of the former British colony of Hong Kong and its response to the coronavirus pandemic, which is causing risk aversion to spread.
EUR/USD felt a pull of gravity with the American dollar drawing haven bids amid fears that China’s decision to impose new Hong Kong security law would lead to major US-China tussle.
The currency pair is trading near $1.0935 at press time, representing a 0.13% drop on the day, having faced rejection at 1.10 in yesterday’s trade session.
Elsewhere, sterling has continued to weaken, weighed by apparent difficulties in Brexit trade negotiations with the EU as well as the prospect of negative interest rates given the likely depth of the economic slowdown ahead.