High demand for foreign currency weakens shilling

Uganda Shilling stable on low greenback demand

The Uganda Shilling closed the week on a firm footing against the U.S dollar, detained at the 3810/3830 levels amidst a slowdown in greenback demand from both importers and commercial banks.

A head of the week, market sentiment alludes to a relatively stable USD/UGX pair, trading at the 3790/3840 ranges amidst slothful foreign currency demand as charitable inflows set in.

A T-bill auction with an offer of Ugx 170 billion for the 91 days, 182 days and 365 days tenors is slated for Wednesday. We expect rates to hold within the current levels.

International news

The U.S. dollar edged higher against its rivals on Friday, as investors reined in appetite for emerging-market currencies like the South African rand and Turkish lira, both of which also enjoyed sharp gains on the back of improving sentiment in developing economies.

Meanwhile, the U.S. tariffs on $200 billion worth of Chinese goods and retaliatory tariffs by Beijing on $60 billion worth of U.S. products are set to kick in today. The Pound Sterling fell to an intraday low after Prime Minister Theresa May said that the UK and European Union were at an impasse in Brexit negotiations, bringing fresh fears of a no-deal Brexit.

The GBP/USD is currently trading at $1.3075 as the EU countries and the UK Parliament await to approve any agreement prior to the March 29 official exit date. The EUR/USD fell to $1.1743 on weaker-than-expected Eurozone manufacturing data. The single currency is set to post a second-straight weekly gain ahead, as the Italian government is slated to release its budget on Thursday.