The Uganda shilling was constrained within the 3695-3715 band in yesterday’s session, with minimal and balanced activity on both the demand and supply counters.

Shilling loses 15 units amidst surge in corporate dollar demand

The local currency was largely on the back foot, losing about 15 shillings versus the buck on Tuesday characterized by a surge in corporate dollar demand.

The bout of shilling strength recently witnessed prompted corporate buyers to take advantage of the somewhat favourable prices, pushing the USDUGX pair to the upper levels of the recent band.

The home unit attempted to recoup some losses late in the session but failed to get enough traction, closing slightly weaker than previous close.

In the day ahead, range bound trading is expected to remain dominant with flows being the prevailing driver of the USDUGX pairs direction.

 Greenback takes a sharp drop

The U.S. dollar was down sharply as tame U.S. inflation data affirmed expectations that the Federal Reserve will continue to hold off raising interest rates. The Labour Department said its core consumer price index slowed to 0.1% last month after edging up 0.2% in January.

For the year through February the core consumer price index rose 2.1%, missing expectations for a 2.2% increase. The pound was down to $1.3064 just before the results of the vote were announced, but then pared some losses to trade at $1.3111.

The success of the vote was thrown into doubt well before the voting got underway as Attorney General Geoffrey Cox warned that the risk of the U.K. being trapped in a backstop arrangement, to avoid a hard Irish border after Brexit, remained “unchanged” from the deal that was defeated in parliament in January.

The euro rose to $1.1292 as the single currency continued to pare losses from last week when the European Central Bank downgraded its outlook on euro area growth and introduced fresh stimulus to prop up bank lending.