The Shilling’s movement was restricted within tight ranges as calm continued to engulf the local FX market on Thursday.
A state of equilibrium permeated as trivial dollar inflows matched corporate demand for foreign currency, leaving the USDUGX pair tucked within the current range of 3700-3720 band.
As dollar demand eases in the coming days, the local unit is likely to be supported by foreign currency inflows as corporates start to settle their tax obligations.
The greenback faltered to a fresh eight-week low after U.S treasury yields fell to new lows resulting in a contraction in volumes of one of the trendiest carry trades globally.
The benchmark U.S. 10-year Treasury yields, for example, has posted a decline of 66 basis points in just 11 sessions.
Auxiliary pressure was also exerted on the buck by reports that traders have begun pricing in further rate cuts by the Federal Reserve in their next meeting, later this month, and subsequently in April as it attempts to create a buffer for the economy from the effects of Covid19.
The Euro sprung over the dollar on the back of increased sell out of the dollar amid declines in U.S treasury yields allowing it to post gains of 1.9 % for the week, the largest jump since June 2017.
The British pound was also unrelenting in its dominance against the greenback, gaining a further 0.7% in yesterday’s trading, owing to Andrew Bailey’s remarks that the Bank of England does not intend to implement an emergency rate cut like its U.S counterpart.