KAMPALA, Uganda–The Uganda shilling traded broadly stable though under pressure against the U.S dollar as the energy and manufacturing sector exerted weight on the greenback supply counters on Wednesday.
The USD/UGX pair closed unchanged at the 3685/3705 levels. Market sentiment is inclined to a bearish outlook for the resident currency as anticipated continuous greenback demand could push the pair above the 3710 mark.
Yields at yesterday’s auction followed mixed trends across the board. Yields on the 91 day paper printed a tad lower to 8.761% from 8.765% whereas yields across the 182 days and 364 days inched slightly higher to 9.228% and 9.685% from 9.066% and 9.579% respectively.
The U.S dollar traded lower against a basket of major currencies as geopolitical uncertainty continued to weigh on sentiment despite upbeat inflation data. The U.S core inflation rose 2.1% year-on-year in March, improving on the 1.8% rise seen in February. Despite the rising inflation, some market participants continued to forecast only two rates this year, on expectations that inflation would continue to lag the Fed’s target of 2%.
Geopolitical tensions between the U.S. and Russia also weighed on the greenback after the U.S. President Donald Trump said he would respond this week to a suspected chemical weapons attack in Syria.
The EUR/USD rose 0.22% to $1.2382 as the European Central Bank President Mario Draghi said that he remained confident inflation would hit the central bank’s 2% target.
The Cable rose 0.19% to $1.4202, following mixed economic data as U.K. manufacturing and construction data missed expectations, while the trade deficit narrowed more than expected in February.