Uganda Shilling Holds Steady Amid Global Economic Uncertainty
The Uganda shilling remained stable against the US dollar over the week, trading within the 3765/3775 range, unchanged from its opening levels, according to Richard Nsubuga, Acting Head of Trading, CIB Markets at Absa Bank Uganda. He attributed the stability to a balance between demand and supply in the foreign exchange market throughout the period. […] The post Uganda Shilling Holds Steady Amid Global Economic Uncertainty appeared first on Daily Star.
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The Uganda shilling remained stable against the US dollar over the week, trading within the 3765/3775 range, unchanged from its opening levels, according to Richard Nsubuga, Acting Head of Trading, CIB Markets at Absa Bank Uganda.
He attributed the stability to a balance between demand and supply in the foreign exchange market throughout the period. Looking ahead, the currency is expected to fluctuate within a wider band of 3680–3800, amid continued uncertainty in the global economic environment.
Money markets remained liquid during the week, prompting the Bank of Uganda to conduct Open Market Operations through a series of mop-up repos aimed at absorbing excess liquidity from the system. Overnight and one-week rates averaged 10.00% and 10.58%, respectively.
Yields at the latest Treasury Bill auction remained largely stable, with the 91-day and 364-day maturities clearing at 10.50% and 12.00%, respectively, while the 182-day tenor edged higher by 12 basis points to close at 11.121%. A total of Shs 587.2 billion in face value was accepted, reflecting a 165% acceptance rate.
Nsubuga attributed the strong subscription to high liquidity conditions in the money markets. The Bank of Uganda is expected to return to the primary market on June 10 for the next Treasury Bond auction.
In regional currency markets, the USD/KES pair traded sideways during the week within the 129.30–129.80 range, supported by balanced two-way flows. In the near term, the Kenyan shilling is expected to trade between 129.20 and 130.20.
Nsubuga noted that the dollar index held steady near 99.4 on Friday, remaining on course for a weekly gain. This was supported by ongoing tensions in the Middle East, which boosted demand for the dollar as a safe-haven currency.
Former U.S. President Donald Trump said peace talks were nearing their final phase and indicated caution over escalating into a full-scale conflict with Iran, despite recent clashes.
Investors, meanwhile, turned their attention to the May employment report for clearer signals on labour market conditions and the likely direction of Federal Reserve policy. Recent data has shown continued strength in the labour market, reinforcing expectations that the Fed could raise interest rates before the end of the year to counter inflationary pressures linked to rising energy prices amid Middle East tensions.
Brent crude futures slipped below $95 per barrel on Friday after falling nearly 3% in the previous session. The decline was driven by optimism that the United States and Iran may still reach a diplomatic agreement to ease tensions and reopen the Strait of Hormuz.
Reports indicate that Donald Trump remains cautious about entering a full-scale war with Iran and would only abandon the current truce if U.S. forces are attacked by Tehran.
Despite the recent decline, global oil prices have still gained more than 4% over the week, as negotiations between Washington and Tehran continue without major breakthroughs.
Elsewhere, Israel’s ongoing military operations in Lebanon are emerging as a key complication in regional stability. Iran-backed Hezbollah has rejected a U.S.-brokered ceasefire proposal between Israel and Lebanon, although Trump indicated that the group had reached out to the White House to explore possible avenues for ending the conflict.
Gold prices also declined, slipping below $4,450 per ounce on Friday and heading for a weekly loss of more than 2%. The drop was driven by persistent geopolitical uncertainty in the Middle East, which continues to keep inflation and interest rate expectations in focus.
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