The shilling demonstrated strength throughout the week, supported by robust inflows of hard currency, despite subdued corporate demand.
At the start of the month, the exchange rate stood at 3660/3670. By mid-week, it appreciated to a yearly high of 3640/3650, attracting buyers from the energy and offshore sectors before closing at 3650/3660.
Market participants assessed the potential impact of new US tariffs on the country to guide their future strategies. In the near term, the shilling is expected to trade within a strong range of 3630-3690, driven by solid commodity inflows.
According to Richard Nsubuga, Acting Head of Trading at Absa Bank Uganda, money markets experienced moderate liquidity tightness throughout the week, with overnight and one-week trades ranging from 10.50% to 11.75%.
Meanwhile, the Kenyan shilling remained relatively stable, trading within the 129.00 – 129.50 range. Some profit-taking on bonds weighed on the currency, which is expected to fluctuate between 129.00 – 129.80 in the near term.
Bloomberg reported that former US President Donald Trump expressed willingness to lower tariffs if presented with favorable concessions from other nations, hinting at possible negotiations. On Wednesday, he announced a 10% baseline tariff on all imports starting April 5—a move seen as retaliatory and potentially harmful to the global economy.
On Friday morning, the US Dollar Index dipped below 102 after a nearly 2% drop on Thursday. Traders anticipate about four 25-basis-point rate cuts by the Federal Reserve this year amid inflation concerns.
The Euro surged over 2% past $1.10, reaching its highest level since October 2024, benefiting from the dollar’s weakness. Meanwhile, the EU braces for tariffs of up to 20%, with its President confirming that the bloc is preparing countermeasures.
WTI crude oil futures dropped to around $66 on Friday following OPEC+’s announcement of a production increase of 411,000 barrels per day next month, sooner than expected.
Gold prices neared $3,100 per ounce on Friday, hitting all-time highs as investors sought safe-haven assets amid concerns over US tariffs.
