The Uganda shilling appreciated further against the dollar in yesterday’s session as corporates settled mid-month obligations.
The home unit was up 20 shillings on the day, with the USDUGX currency pair trading within the 3740/3760 range at the closing bell, on the back of frivolous dollar demand.
We see competing forces taking centre stage in the local currency market, limiting the movement of the home unit against the greenback within familiar ranges. Investor focus now shifts to a T-bond auction where government expects to raise Ugx 220bn in the 3yr and 10yr papers.
Greenback edges marginally lower than peers
The dollar edged marginally lower against its peers after poor economic data released on Tuesday, fuelled investor mindset that the U.S Federal Reserve was likely to cut rates sooner rather than later to stimulate growth.
Data released revealed that the U.S Producer Price Index (PPI) for the month of May showed improvement but at a decelerating rate because of tepid price pressures. Increased uncertainty over the U.S-Sino trade war and the prospect of U.S President Donald J trump imposing tariffs in Europe and Japan continue to weigh in on risk sentiment.
The Euro clawed back losses in yesterday’s trading following the greenback’s weakness as well as betterthan-expected Italian industrial output figures, which came in at -0.7%, despite the expected forecast of -0.9%.
The British pound made some slight gains, crossing recently placed resistance levels after the publication of positive UK average earnings numbers which also led to its nomination as the best G10 currency. Further support for the sterling came from the buck’s depreciation on account of poor data.