The Uganda Shilling extends gains against the U.S dollar

KAMPALA, Uganda–The Uganda shilling extended the week’s gains against the U.S dollar on Friday as some commercial banks converted their dollar holdings to cope with the local currency liquidity squeeze. On Friday commercial banks quoted the shilling at 3825/3845, compared to Thursday’s close of 3835/3855.

The shilling has rallied against the greenback in recent days, motorized by slow foregin currency demand from importers and corporate firms, prompting banks to convert lumps of their dollar reserves to strengthen their shilling positions.

The USD/UGX duo is estimated to remain constrained within the current levels as players look out for fresh factors that may influence a breakout in the pair. Meanwhile, Bank of Uganda holds a 3 year and 10 year primary bond auction on Wednesday.

The U.S. dollar struggled near lows against its peers after U.S. jobs data showed slower than expected wage growth. U.S. wages did not increase extensively signalling that there might not be a rapid pickup in the pace of long-term interest rate hikes.

The Pound retreated as resigned over Prime Minister Theresa May’s Brexit plan. The GBP/USD erased earlier gains and was effectively flat at $1.3300. The Pound pulled back on news that British Brexit Secretary David Davis, a key member of Britain’s cabinet had resigned, a blow to Prime Minister Theresa May.

The Euro was flat in the early hours of the session but later increased against the U.S dollar following the
release of a mixed U.S. Non-Farm Payrolls (NFP) that diminished sentiment on the greenback. The EURUSD rose above the 1.1750 handle on the day.