Ugandan shilling weakens against dollar

FOREX

The Ugandan shilling was marginally stronger on account of interbank selloff, as commercial banks squared positions ahead of the 2018 end of year holidays trading in the range of 3688/98, indicates an Alpha Capital Markets report.

In the fixed income market, a sh195billion auction was held, the effective yields came out at 10.798, 11.999, and 13.252% for 91,182 and 364 day tenors respectively. The auction received significant uptake.

On Monday, Bank of Uganda quoted the shilling (against the US dollar) at 3,700/3710 from 3,689/3,699 that was recorded on Friday buying and selling, respectively.

"Outlook for the shilling indicates a choppy market on account of slackened demand due to subdued business activity as major players shut down for the holiday season," said financial analyst Stephen Kaboyo.

The Ugandan shilling reached an all-time high of 3,888 in June this year and a record low of 1872.75 in November 2009.

In regional currency markets, the Kenyan shilling extended gains against the dollar due to tight liquidity conditions as commercial banks sold dollars to meet the shilling reserve requirements amid flat dollar demand.

The Kenyan shilling was trading in the range of 101.45/65.

In the international currency markets, the report further indicates that the dollar came off its lows but remained weaker overall after the Federal Reserve guidance on tightening cycle was less dovish than expected.

The Fed raised interest rates, while citing the ongoing market volatility and potential slowdowns around the world.