High demand for foreign currency weakens shilling

High demand for foreign currency weakens shilling

High demand for foreign currency weakens shilling: The local unit shred off its recent gains against the U.S. dollar after foreign currency demand outweighed supply early in Friday’s trading session.

A surge in greenback demand from corporates and interbank players, attracted by the favorable levels sent the home currency 25 shillings lower by session’s close.

This week, participants expect the local unit to remain range bound within the 3705/3725 levels as the Central Bank keenly watches the market. Bank of Uganda will hold a Treasury bill auction on Wednesday with hope to raise Ugx
170 Bio.

The U.S. dollar was stronger against other currencies on Friday, as political tensions pulled the Euro and Turkish lira lower.

Fears of market contagion were somewhat justified after reports surfaced that the European Central Bank was assessing its exposure to Turkey.

This sung in after the U.S. President Donald Trump intensified his spat with Turkey by imposing higher tariffs on metal imports, putting unprecedented economic pressure on a NATO ally and deepening turmoil in Turkish financial markets.

The GBP/USD pair fell to $1.2748 as data showed that the U.K. economy steadied in the second quarter of year was overshadowed by ongoing fears of a no-deal Brexit.

The Euro was on the defensive after touching a 13- month low against the dollar as investors bid up safe havens on worries about the exposure of European banks to crisis-hit Turkey.