The Uganda shilling extended its depreciation trend against the dollar in today’s trading session, closing at 3700/3710, compared to opening levels of 3685/3695.
According to Tuesday’s Absa Market Report, the shilling’s weakness was primarily driven by strong dollar demand from corporates and offshore investors, largely stemming from heightened geopolitical tensions in the Middle East.
This demand significantly outweighed the available dollar supply in the market, exerting downward pressure on the local currency. Liquidity conditions in the money market remained ample, supported by quarter-end government releases.
Consequently, overnight and one-week money market rates averaged 9.75% and 9.95%, respectively. The Bank of Uganda continued to actively manage excess liquidity through a 2-day repo mop-up operation.
