Shilling strengthens further in first week of November on low import demand.

The shilling maintained its winning streak through Wednesday’s session as continued healthy flows that outweighed the demand side led to its appreciation to close the day at the 3770/3780 levels from opening levels of 3785/3795, a report by Catherine Kijjagulwe – Head of Trading at Absa Bank Uganda indicates.

“Money Markets were fairly liquid on Wednesday with overnight yields at averages of 11.00%. Bank of Uganda held a 2-year and 10-year Treasury Bond auction on Wednesday 2nd November 2022 and yields cleared at averages of 16.750% and 17.500% respectively,” Kijjagulwe said.

Hitherto, a report by Centenary Bank report indicates that the Ugandan shilling firmed on Tuesday, as commercial banks trimmed their dollar positions on the back of low importer demand.

The dollar index rebounded on Tuesday from an early 0.75% loss to modest gains after U.S. data lifted Fed hike expectations before Wednesday’s FOMC meeting and key data later in the week.

EUR/USD fell 0.1% after hitting its lowest since last Tuesday. Record high euro zone inflation prompted ECB President Christine Lagarde to tout rate hikes, but the 2.84% implied ECB rates ceiling looks timid versus 10.7% inflation Sterling was flat after the dollar’s rebound.

The BoE’s small, inaugural QT was well received ahead of the 75bp hike expected at Thursday’s MPC meeting.

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