The Ugandan shilling remained stable throughout the week, trading consistently at 3660/3670 per dollar. The short-term outlook appears positive, with expectations that the shilling will continue its upward trend, likely fluctuating between 3640 and 3690 in the near term.
Richard Nsubuga, Trader CIB Markets at Absa Bank Uganda, noted that the money market showed good liquidity, with interbank transactions for overnight and one-week funds averaging 10.70% and 11.28%, respectively.
Meanwhile, a treasury bond auction held on Wednesday attracted strong investor interest, leading to accepted bids totaling Shs 1.243 trillion, exceeding the offered size of Shs 990 billion. The 3-year, 10-year, and 20-year benchmarks cleared at 16.200%, 17.100%, and 17.500%, respectively.
Kenyan Shilling Under Pressure
In contrast, the Kenyan shilling faced downward pressure as market participants moved to cover short dollar positions. Offshore investors began offloading some bond holdings to acquire foreign currency, adding further strain on the currency.
Additionally, upcoming corporate dividend remittances are expected to exert more pressure on the shilling. On Friday, the dollar-shilling exchange rate was observed at 129.35/129.45, with short-term projections suggesting it could trade between 129.00 and 130.00.
Global Markets and Commodities
He said the dollar index held steady at around 104 on Friday as traders monitored the Federal Reserve’s monetary policy stance. While the Fed opted to maintain its current policy, it signaled the possibility of two rate cuts later this year. Fed Chair Jerome Powell cited growing concerns about economic growth, employment, and inflation, downplaying the potential inflationary effects of new tariffs as “transitory.”
In the commodities market, WTI crude futures hovered around $67 per barrel, driven by OPEC+ production cuts and U.S. sanctions on Iran, which raised supply concerns.
Gold prices continued their upward trend, fueled by safe-haven demand and dovish signals from the Federal Reserve. On Wednesday, Powell reiterated expectations for two rate cuts this year, citing increasing economic uncertainty due to new tariffs from the administration. As a result, gold climbed to approximately $3,030 per ounce on Friday.
