The Uganda shilling surrendered its earlier gains on Wednesday fortified by an uptick in foreign currency demand from companies in the manufacturing sector.
The shilling movement was constrained within the 3680/3700 bracket in the morning. However, late dollar buyers swarm in the local market pushing the unit lower to close at the 3690/3710 levels. We expect the home currency to trade range bound at current levels with a bearish tinge towards the shilling.
Results in yesterday’s T-bill auction were oversubscribed, where the 364day paper dropped to 13.252 from 13.503 per cent. The 182day paper edged higher to12.362 from 12.1999 percent and the 91day paper remained unchanged at 10.999percent.
Dollar remains on back foot
The dollar remained on the back foot after U.S. Trade Representative Robert Lighthizer said that he did not see any progress made on structural issues during U.S. talks with China last week.
The buck was also pressured by comments of the senior Federal Reserve officials on Tuesday suggesting that they are in no hurry to raise interest rates further against a backdrop of slowing global growth.
The GBP/USD pair last traded at $1.2867, after UK Prime Minister Theresa May’s government survived a vote of noconfidence giving May until next week to table an outline for a plan “B.” The euro was down, last at $1.140, after being compressed earlier in the session to a 12-day trough of $1.138. Data showed Germany barely escaped a recession in the second half of 2018 and European Central Bank chief Mario Draghi warned on Tuesday the euro zone economy was weaker than anticipated.