Shilling gains ground amidst dollar inflows

There was continued quiet trading during Wednesday’s session as the shilling gained some ground to close the day at the 3810/3820 levels with limited activity on the demand side that was outweighed by dollar inflows, an Absa report indicates.  

“Money Markets were liquid on Tuesday with overnight yields at averages of 9.21%. Bank of Uganda mopped Ugx283 billion in a 2-day Repo. Bank of Uganda will hold a Ugx550 billion 5-year and 20-year Treasury Bond auction on Wednesday 7th September 2022,” Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said.

A report by Centenary Bank noted that the Ugandan shilling weakened slightly on Monday, undercut by dollar demand from importers and some players in the interbank market.

However, the dollar took a breather on Tuesday after a sweeping rally, easing slightly from milestone highs on the euro, yen and sterling, but not too far as recession stalks Europe, and U.S. interest rates are poised for sharp rises.

Sterling was last up 0.48% to $1.1578, after sliding to a 2-1/2-year low of $1.1444 on Monday. Liz Truss is Britain’s new Prime Minister after winning a leadership vote on Monday and her promises of tax cuts add uncertainty to government finances.

South Africa’s rand regained some strength through the day after falling to a two-year low early on Monday but stayed well below the 17 rand per dollar range as investors sought a safe haven amid concerns over global economic growth and energy prices.

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