Uganda shilling maintained an upward trend in Monday’s session amid flat dollar appetite as firms reserved some of their local currency holdings for pending mid-month tax payments. Activity in the local FX market was minimal leaving the USD/UGX pair close the day shy at a key psychological level of 3735/3755 stronger than previous close. We expect a familiar narrative today as the shilling continuous to clamp on its gains. High liquidity in the money market prompted the regulator to come in on the buy side. The overnight interbank lending rate ranged between 7.0%-11%.
The U.S. dollar surged near a 16-month high on Monday amid expectations that the Federal Reserve will raise rates in December and beyond. An equity selloff also helped boost demand for the greenback, as Wall Street opened lower. Still, trading is expected to be slower, with the U.S. bond market closed because of the Veterans Day holiday. The cable inched lower settling at $1.2894 as traders fear a no-deal Brexit is immediate. Renewed Brexit concerns are seeing the Pound get hobbled in the broader marketspace, with previous hopes for a lastminute deal appearing this week once again getting dashed on the rocks. The Euro fell to $1.1265 after the European Commission rejected Italy’s 2019 budget, citing it was in breach of European fiscal rules. Italy’s government has until today to submit a revised fiscal rule.
Source: Commercial Bank of Africa Uganda