The Ugandan shilling held firm against the US dollar throughout the week, trading within a narrow and stable range. This stability was supported by balanced activity between buyers and sellers in the foreign exchange market, according to Catherine Kijjagulwe, Acting Head of Markets at Absa Bank Uganda.
Commodity-related inflows were notable, providing underlying support for the local currency and keeping the dollar on the backfoot. The Bank of Uganda also remained active in the market, purchasing US dollars through its FX daily auctions to bolster foreign currency reserves.
In the money markets, liquidity improved week-on-week. Overnight and one-week funding rates ranged between 5.5% and 11.75%. During the treasury bill auction held on Wednesday, the 364-day paper cleared at an average yield of 15.254%, while the 182-day tenor printed at 12.800%. The 91-day auction was cancelled. Out of the Shs 355 billion offered, a total of Shs 286.24 billion was accepted. The Central Bank has not scheduled any government securities auction for the coming week.
She said the Kenyan shilling also posted marginal gains intra-week, recovering earlier losses due to increased demand. By Friday, it was flat against the dollar, trading at 129.10/50—unchanged from Thursday’s session. Notably, Kenya’s Central Bank Governor is considering diversifying the country’s foreign exchange reserves by including gold.
Globally, the US dollar index edged higher and closed the week in positive territory. This came as traders responded to comments from former President Trump, suggesting progress in US-China trade negotiations. Market attention is now turning to the upcoming Federal Open Market Committee (FOMC) meeting on May 7, where investors will closely analyze the Fed Chair’s tone for policy direction.
“The Euro remained subdued, falling 0.4% against the US dollar. It was a mid-performer among the G10 currencies as lackluster data and trade-related uncertainties weighed on sentiment. Despite the short-term decline, the Euro’s technical outlook remains bullish, supported by a pattern of higher highs and higher lows,” she said.
She noted that oil prices slipped on Friday and posted a weekly decline of over 3%, driven by oversupply concerns and trade uncertainty between the US and China. Brent crude futures dropped 82 cents to $65.73 per barrel.
Gold briefly dipped below $3,300 per ounce following President Trump’s reversal on tariff threats and statements regarding Federal Reserve Chair Powell. However, demand for gold is expected to remain strong as a safe-haven asset amidst global uncertainty.
