The local currency remained firm versus its American counterpart in Tuesday’s session. The pair maintained a tight range, closing the day unchanged from previous levels, with most players staying on the sidelines.
The shilling was also supported by waning liquidity in the money market that saw the regulator come into the market to inject funds.
In the new day, we expect the USD/UGX pair to trade within the current band, with a bias towards a stronger shilling if the tightening liquidity in the money market space perseveres.
The U.S. dollar surged towards five-week highs on Tuesday after U.S. President Donald Trump and Congress struck a deal to raise the debt ceiling, easing fears of the government defaulting. In addition the dollar got a boost after the International Monetary Fund raised its forecast of U.S. growth in 2019 while lowering its global forecast due to trade and Brexit uncertainties.
The IMF noted in a report that downside risks have put pressure on the global economy which is expected to grow at 3.2% in 2019 and 3.5% in 2020, a drop of 0.1% for both. The Euro weakened broadly as investors geared up for news of fresh stimulus from the European Central Bank, in their meeting on Thursday. The single currency dipped to 1.1150 levels.
The pound fell after a slight bounce as Boris Johnson, known for his hardline stance on Brexit, was named Prime Minister and leader of the Conservative Party. Johnson reiterated in a speech to party members his goal of leaving the EU by October 31, uniting a split party on Brexit, and leading the Tories in winning the next general election.