The shilling continued to swing within a narrow range, closing the day at 3805/3815 from opening levels of 3810/3820 as dollar inflows from NGOs and exporters were matched with Corporate demand from the manufacturing, energy and telecom companies, Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said in a report.
“Money Markets were fairly liquid on Thursday with overnight yields at averages of 10.02%. Bank of Uganda mopped Ugx45 billion through a 7-day Repo. There is no government securities auction scheduled during the coming week,” Kijjagulwe said.
Hitherto, Centenary Bank noted in a report that although the Ugandan shilling was little-changed on Wednesday, demand from fuel importers and the merchandise sector was exerting a little pressure on the local unit.
“The dollar held near recent peaks on Thursday as traders increased bets that the Federal Reserve will become even more aggressive next week in its battle to curb inflation,” the report said.
Sterling fell 0.1% to $1.1530, while the euro slipped 0.07% to $0.9971 both nursing losses after an inflation surprise sent the greenback surging on Tuesday.
The Euro had some help from European Central Bank policymaker Francois Villeroy de Galhau who said on Wednesday that the bank’s neutral rate, estimated as below or close to 2% in nominal terms, could be reached by the end of the year.
Market Outlook: The shilling is forecast to strengthen against the dollar.