The Uganda shilling continued to weaken against the US dollar during the morning session, opening at 4160/4170 and sliding to a fresh all-time low of 4240/4250, according to Absa Bank Uganda Tuesday market report.
The move was driven by strong interbank dollar demand amid limited hard currency supply, which kept the market significantly bid for most of the day. However, sentiment shifted in the afternoon after the Central Bank announced an emergency Monetary Policy Committee (MPC) sitting scheduled for tomorrow.
The announcement triggered a wave of dollar selling, allowing the shilling to recover part of its earlier losses and pare back some of the day’s depreciation, closing stronger at 4120/4130.In the money markets, liquidity conditions improved modestly, with overnight funding rates easing to an average range of 9.80% – 10.00%.
The improvement in liquidity followed increased market availability of shilling funds, although conditions remained relatively tight overall. Meanwhile, the Central Bank remained active in its liquidity management operations, mopping up UGX 45 billion through a 2-day REPO