A persistent lack of dollar demand continued to boost the performance of the shilling against the dollar on Tuesday. With supply for foreign currency outweighing dollar buyers, the home unit stood tall against the greenback throughout the session.
The USD/UGX pair drifted towards the lower regions of the 3670-3690 range. As the dearth in foreign currency demand ensues, we see the local unit strengthening further against the dollar barring any fresh factors.
Greenback gains but retracts
The U.S. dollar initially gained but later retracted against a basket of major currencies in Tuesday’s trading session amid disappointing U.S. manufacturing data. The ISM Manufacturing Index dropped to 49.1 in August from 51.2 in July, far below expectations for a reading of 51.3, signalling a contraction of the U.S. manufacturing sector for the first time in 3 years amid Sino -U.S. trade tensions.
The euro kept steady after tumbling to a 28-month low of 1.0296 in earlier trading, with markets increasing the likelihood of a 20 basis point rate cut by the European Central Bank, in addition to a monetary policy stimulus package, as the European economy falters.
The pound crashed to its lowest level in 3 years against the dollar as a deepening political crisis in the U.K. worried investors. With British lawmakers voting for a Brexit delay, Prime Minister Boris Johnson threatened to call a snap election, determined to deliver Brexit at any cost.
(Commercial Bank Of Africa Uganda)