Shilling edges higher on Wednesday

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The Uganda shilling edged slightly higher on Wednesday, closing the trading session at 3,463/3,473 from an opening of 3,465/3,475.

Traders attributed the modest gain to inflows ahead of Thursday’s Treasury Bond auction settlement, which outweighed demand from manufacturers and energy firms. The local currency is expected to remain within the 3,430 to 3,500 range in the short term.

Money markets stayed liquid, with overnight and one-week interbank rates averaging 9.55% and 10.06% according to the Absa market report. Dealers said liquidity conditions have kept rates stable over the past few sessions as government securities continued to attract strong investor interest.

In the bond market, yields were largely steady, showing little movement across tenors. The 3-year paper cleared at 16.00%, the 10-year at 17.150%, and the 20-year at 17.95%.

The ministry of finance accepted sh1.123 trillion in face value, about 113.4% of the sh990b offer, reflecting robust appetite among investors despite the flat yield curve.

Analysts expect the currency to hold its ground in the coming days, supported by healthy inflows and sustained demand for government securities.