The Uganda shilling swooped lower against its foreign counterpart on Wednesday amid balanced and minimal activity on the demand and supply counters.
Markets

Shilling plunges lower than foreign counterpart

The Uganda shilling swooped lower against its foreign counterpart on Wednesday amid balanced and minimal activity on the demand and supply counters.

The shilling traded within the 3720/3740 band as dollar demand from interbank players posed some threat to the local unit in the mid- session. Outlook remains towards a weaker currency with the USD/UGX trading range bond at the 3730/3770 levels.

Yields dropped across both tenors in yesterday’s T-bond auction. The 2 yr and 5yr papers printed at 15.250 and 16.750 per cent from 15.50 and 16.90 per cent respectively.

Dollar dips against rivals

The dollar dipped against its rivals on Wednesday as Fed Chairman Jerome Powell said that interest rates were “just below” neutral, dampening the optimism for a more aggressive rate-hike cycle.

With interest rates sitting in a range of 2% to 2.25% and the range of estimates for the neutral rate between 2.5% to 3.5%, RBC said Powell’s remarks represented more fact than a dovish pivot, indicating the market reaction was overdone.

The GBP/USD rose to $1.2814 even as Bank of England governor Mark Carney warned that a “disorderly” exit from the European Union would pressure the U.K. economy into a far worse recession than that experienced after the global financial crisis of 2008.

The EUR/USD pair broke dramatically to the upside boosted by a sharp slide of the US dollar, while Italy showed signs of conceding to the European Commission’s demand of reducing it deficit budget targets.