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Uganda shilling still weaker against US dollar – Absa
Economists warn that the demand for the US Dollar is expected to outstrip its supply further impacting the exchange rate. PHOTO/FILE
What you need to know:
- The Absa Bank Uganda Friday said that the local unit is now just a few shillings shy of the 3950 level which the next key level markets are looking out for.
The Uganda shilling continued to slide during the week to trade at the rate of Shs3927 buying per US dollar and Shs3937 selling on Friday, which is an approximate depreciation of 4.00 per cent since the start of the year.
The Absa Bank Uganda Friday said that the local unit is now just a few shillings shy of the 3950 level which the next key level markets are looking out for.
The Head of Trading at Absa Bank Uganda, Ms Catherine Kijjagulwe said: “Demand persisted from offshores and also triggered some clients who had initially held off their buying interest hoping for a reverse in the trend. Month-end inflows coupled with commodity inflows continued to trickle into the market but were outweighed by the strong demand.”
“Looking ahead, the Uganda currency is still likely to remain volatile and vulnerable, we may see the shilling recoup some of its losses if flows trickle in significantly before the month ends. Else if we breach the 3950 level then the next key level of 4000 could trade too. Overall likely trading ranges between 3870 -3970 levels in the near term,” she added.
In the weekly analysis by Absa, Ms Kijjagulwe further stated that Money Markets faced tight liquidity conditions during the week as clients remitted mid-month taxes at the start of the week, and overnight yields traded between 10.00 per cent to 11.50 per cent.
Ms Kijjagulwe said Bank of Uganda held a 5-year and 15-year Treasury Bond auction that cleared at averages of 14.60% and 16.30% respectively, adding that Bank of Uganda is again scheduled to hold a Treasury Bill auction on Wednesday 28th February 2024.
Despite the current depreciation, Uganda's foreign exchange remains stable compared to other markets in the East African region.
