The Uganda shilling edged lower against the U.S dollar on Thursday underpinned by continuous greenback demand from both interbank players and firms in the manufacturing sector.

Uptick in dollar demand dips Shilling performance

The Uganda Shilling depreciated against the dollar in yesterday’s session undercut by an uptick in greenback demand from manufacturing firms and interbank players.

The local unit was locked at the 3720/3740 band at day’s close. Outlook remains on a weaker shilling as activity increases in the local FX market.

Relatively skewed liquidity in the money market with the overnight and 1week lending rates running between 9.0 -11.0 per cent and 10.0-12.0 per cent respectively.

Dollar struggles for traction against peers

The dollar struggled for traction against its peers, with investors increasingly convinced the Federal Reserve will not raise interest rates this year amid risks of a sharper slowdown in global growth.

The greenback was marginally firmer against the yen, after falling 0.2 per cent earlier in the session as traders wagered that the monetary tightening cycle in the world’s largest economy has been halted for the year.

British pound changed hands at $1.2787, relatively unchanged from its previous close. Traders expect sterling to remain volatile over the next few weeks due to Brexit woes. The euro was down at $1.1448, after touching an intraday high of $1.1485. The single currency continues to strengthen as growth and inflation remain weak in the Eurozone, well below European Central Bank forecasts.