The Uganda shilling posted massive gains against the US dollar in today’s trading session, appreciating from opening levels of 4215/4225 to close the day at 4105/4115, according to Absa Bank daily market report.
According to the report, the appreciation was primarily driven by robust offshore inflows, supported by a softer global dollar following the US midterm elections. The move was further accelerated by strong month-end dollar inflows, which significantly outpaced market demand and provided ample hard currency liquidity throughout the session.
In the money markets, liquidity conditions tightened further, with overnight funding rates averaging between 12.50% and 12.75%, as the impact of the recent central bank rate hike continued to permeate the banking sector.
Demand for shilling liquidity remained elevated amid month-end funding requirements and positioning ahead of the treasury bill auction settlements tomorrow. Today’s Treasury bill auction registered strong investor demand, with total bids amounting to UGX 439.0 billion against an offer of UGX 350.0 billion, translating into an overall subscription rate of 125.4%.
The Bank of Uganda accepted UGX 383.8 billion in cash proceeds. Yields on the 91-day, 182-day and 364-day tenors cleared at 11.682%, 13.425% and 14.752% respectively.
