The Uganda shilling eased against its foreign counterpart on Wednesday amid an uptick in greenback demand from interbank players.
The local unit was constrained within the 3660/3680 band in the morning, when emergency dollar buyers’ swarm into market later in the day pushing the shilling to close higher at the 3665/3685 levels weaker than previous close.
We expect a familiar narrative today as FX activities expand amidst skewed levels of liquidity in the money market arena.
Greenback falls sharply against rivals
The U.S. dollar fell sharply against its rivals as the Federal Reserve left interest rates unchanged and vowed to keep the brakes on further rate hikes amid concerns about slowing growth and subdued inflation.
The decision to leave rates alone arrived just hours after data showed ongoing weakness in the underlying U.S. housing market where pending home sales fell 2.2% to 99 last month. Elsewhere, the pound recouped some of its losses against the greenback from a day earlier.
Investors continue to bet that a no-deal Brexit will be avoided despite a key amendment to the Withdrawal Deal failing to win enough votes in Parliament on Tuesday.
The EUR/USD pair clocked a 20-day high of $1.1508, courtesy of the dovish Fed and could pick up a strong bid in Europe if both the German jobs data and the Eurozone Q4 GDP data blow past expectations, dashing hopes of a dovish change in the ECB’s forward guidance.