KAMPALA – The local unit shred off its week’s gains against the U.S. dollar after foreign currency demand outweighed supply on the last day of trading.
A surge in greenback demand from corporates and interbank players, attracted by the favourable levels sent the home currency 5 shillings lower by session’s close.
This week, participants expect the local unit to remain range bound within the 3650/3700 levels as the Central Bank keenly watches the market.
Greenback rises against most peers
The dollar rose against most other currencies, holding near a six-week high as fresh worries about U.S.-Sino trade tensions and global growth drove appetite for safehaven assets.
Trade tensions between the world’s two largest economies have been a major driver of global investor sentiment over the past year.
Market confidence took a hit last week when U.S. President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal.
Trump also vowed to increase U.S. tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent currently if the two sides cannot reach a deal by March 2. The euro was marginally lower versus the greenback at $1.1322 as core European government debt yields touched their lowest in over two years.
Elsewhere, sterling was down at $1.2935. Traders expect the pound to remain volatile amid heightened political uncertainty over the Brexit process.
