The tide turned in the Uganda Shilling’s favour during Wednesday’s trading session as a result of increased foreign currency inflows.
A lack of dollar demand for most part of the day coupled with increased corporate activity on the supply counter exerted downward pressure on the USD/UGX currency pair to close 5 shillings lower by session’s close.
We expect a drop in market activity that could see the shilling stay range bound within recent levels.
Dollar holds gains
The dollar held gains after minutes from the Federal Reserve’s last policy meeting hosed down some aggressive expectations the central bank would embark on a series of deep interest rate cuts.
Asian currencies are expected to trade in tight ranges today ahead of U.S. Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole on Friday for signs of just how far the U.S. central bank is prepared to lower rates.
Meanwhile, the sterling traded slightly lower against the dollar after the French government said it believes a nodeal Brexit is the most likely scenario, prompting Johnson demand for the backstop be removed from the divorce deal. The backstop agreement is an insurance policy to keep the Irish border open after Britain leaves the European Union.
The euro struggled to make headway against a resilient dollar and was stuck near $1.11, after Italy’s Prime Minister Giuseppe Conte announced his resignation, with some investors believing the move made a snap general election less likely