The Uganda shilling lost ground on Wednesday weighed down by robust demand for hard currency from local market participants and offshore investors liquidating part of their government bond holdings ahead of tomorrow’s redemption and renewed tensions coming out of the Middle East in the recent hours of the day.
According to Absa Bank Uganda’s Wednesday Market Report, the shilling closed the day trading at 3685 / 3695 levels compared to opening levels of 3660 / 3670.
Money market conditions remained liquid, with overnight and one-week rates averaging 9.75% and 9.90%, respectively.
Yields at today’s Treasury bill auction declined across all tenors, reflecting abundant liquidity in the money market and strong investor demand driven by the reinvestment of coupon payments and maturing securities scheduled for settlement tomorrow.
The 91-day, 182-day, and 364-day tenors declined by 50bps, 72bps, and 50bps, respectively, clearing at 10.002%, 10.400%, and 11.501%. The Ministry of Finance accepted bids totaling UGX 441.8 billion in face value, representing an acceptance rate of 126%, underscoring robust investor appetite amid the prevailing liquidity conditions.
