Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda, pointed out that the shilling had maintained its strength during Tuesday’s session, closing the day at highs of 3750/3760 during an overall quiet day that saw limited activity on the demand side with continued healthy inflows.
“The short-term Money Markets were fairly liquid with continued outflows as Corporates pay their mid-month taxes overnight yields traded at averages of 10.96%. Bank of Uganda will hold a Treasury Bill auction on Wednesday 23rd November 2022,” Kijjagulwe said.
A centenary Bank report also noted that the Ugandan shilling was supported by subdued demand for dollars from importers.
A cooler read of U.S. consumer inflation last week has prompted investors to factor in the possibility of U.S. interest rates rising more slowly, which in turn, reduces the dollar’s appeal to yield-hungry overseas buyers.
The euro regained some lost ground after falling sharply against the U.S. dollar on Tuesday following reports that Russian missiles had hit Poland and killed two people.
The pound hit three-month highs against the dollar on Tuesday, after last month’s U.S. producer inflation rose less than expected, although there was a degree of caution among sterling investors ahead of the UK government’s budget this week.