The Uganda shilling was on the back foot against the U.S. dollar on Monday on account of increased dollar demand.
After a week characterized by low activity, the day started in the same vein, with the home unit holding steady against the greenback in the morning hours.
A surge in foreign currency demand in the afternoon session drove the USD/UGX currency pair 10 shillings higher by the closing bell.
The local unit could come under further pressure in the near-term given thin liquidity levels in the interbank market, while dollar supply remains relatively mute.
Greenback stronger than peers
The U.S. dollar was stronger against a basket of other currencies on Monday ahead of an expected Federal Reserve rate cut on Wednesday. The Fed is expected to cut rates by at least 25bps, its first rate cut since the financial crisis.
The move would be a so-called insurance cut to protect the U.S. economy from global uncertainties and trade pressures, in contrast to cuts by countries facing more imminent risks The Euro dropped to a daily low of 1.1110 during the European trading session, but erased most of its losses later in the day, closing modestly higher.
Sterling fell to its lowest rate in more than two years amid fears that the U.K. will leave the European Union without a deal. The pound’s losses accelerated after it breached a key psychological level of $1.23 and Johnson repeated that while he wanted to secure a new trade deal with the EU, the UK would exit the bloc on Oct. 31 with or without an agreement.
EU officials have said they will not change the terms of the draft agreement negotiated by former PM Theresa May
