The Uganda shilling edged higher against the greenback on Wednesday amid increased dollar inflows from commodity exporters and waning hard currency demand by the corporates.
The home unit was up by 10 shillings, closing within the 3715/3735 range as late buck sell off by interbank players lent more support. We expect a similar narrative in today’s session with the USD/UGX trading in the 3710/3750 bracket.
In the money market, the central bank absorbed UGX 209bn to ease on the high liquidity. There is a T-bond auction today with UGX 240bn on offer, we expect a healthy subscription and rates to print close to current levels.
Dollar holds near two-week highs
The U.S. dollar held near two-week highs on yesterday after a senior Federal Reserve official reaffirmed the need for further rate increases and as investors sought shelter in the currency thanks to simmering Sino-U.S. trade tensions.
Attention will now turn to a speech by Fed Chairman Jerome Powell later on Wednesday and the minutes from the Fed’s Nov. 7-8 meeting on Thursday. Investors would be looking to further clues on how many more times the U.S. central bank is likely to hike rates in 2019.
Elsewhere, sterling was down a touch at $1.2733. The pound is likely to remain under pressure as traders bet that British Prime Minister Theresa May would fail to get the nod for her Brexit agreement in a fractious parliament.
The Euro changed hands at $1.1295, gaining 0.07 percent versus the dollar. The single currency has lost 1.5 percent of its value in recent sessions due to signs of weakening Eurozone economic momentum.