The Uganda shilling extended its losses against the dollar in today’s session, weakening from opening levels of 3985 / 3995 to an all-time low of 4030 / 4040, before staging a modest recovery to close at 4020 / 4030.
According to Monday Absa Bank Uganda report, the depreciation was largely driven by strong and persistent dollar demand from corporate players, compounded by offshore investors unwinding portions of their local bond holdings, which added further pressure on the local currency.
In the money markets, liquidity conditions improved modestly following month-end and quarter-end government releases, providing some relief from the tight liquidity conditions observed in recent sessions.
Consequently, overnight funding rates eased, averaging around 10.50%. The Central Bank remained on the sidelines and refrained from conducting any open market operations, allowing the improved liquidity conditions to prevail. Bank of Uganda will conduct a treasury bond auction this Wednesday where the benchmark 3-year, 10-year and 20-year maturities will be reopened.
