The Uganda shilling appreciated during the first full trading week of 2026. According to Absa Bank Uganda weekly market updates report, having opened at 3615 / 3625, the shilling experienced strong appreciation pressures largely attributed to heavy portfolio inflows that outclassed existing demand from corporate entities in the manufacturing, telecom, and energy sectors.

Richard Nsubuga, the Ag. Head of Trading at Absa Bank Uganda said that the local unit took advantage of the inflows to print at shilling weekly highs of 3570 / 3580 – a level which attracted interbank buyers, closing Thursday’s trading at 3587 / 3597.

“Corporate demand has subsidized in the previous sessions with mid-month tax payments taking center-stage as taxpayers are expected to comply with this month’s Tax payment deadline of 12 January. The shilling is likely to continue trading within the 3550 – 3630 band in the near term.”

Liquidity in the money markets was tight, largely attributed to a combination of year-end and mid-month tax payment obligations. Overnight funds averaged at 10.02% within a range of 8%-11% while one-week funds oscillated within a 10% – 11% band at an average of 10.35%. Results from last week’s Treasury Bond auction dropped across all tenors. The benchmark tenors cleared as follows: 3-year at 15.900%, 10-year at 16.750% and 20-year at 17.625%.

The Ministry of Finance accepted a substantial UGX 1.549 trillion in face value, representing 156% of the auction offer (UGX 990 billion). This strong oversubscription reflected robust investor appetite, driven by reinvestment of coupon payments that were released on Thursday and confidence in a relatively stable macroeconomic environment—factors that continue to support demand for domestic debt instruments. Looking ahead, yield movements are expected to be influenced by the government’s borrowing appetite in the domestic market.

Across the border, the Kenyan shilling held steady, closing Friday at 128.90/129.10 as demand and supply balanced out.
The U.S. dollar index edged closer to 99 on Friday, extending its winning streak to a fourth session and hitting its highest level in nearly a month. The move reflects investor positioning ahead of the December jobs report, which is expected to offer fresh insight into labor market trends and the Federal Reserve’s policy outlook. Futures markets currently see almost a 90% chance that the Fed will hold rates steady at its January meeting, though traders continue to anticipate at least two rate cuts later this year.

The British pound hovered near $1.346 on Friday, holding close to the three-month high of $1.352 reached on December 23, as investors weighed contrasting interest-rate outlooks between the Bank of England and the U.S. Federal Reserve. Markets are pricing in at least two Fed rate cuts this year, with a slim chance of a third, a view that continues to pressure the dollar.

Crude oil futures traded near $58.30 per barrel on Friday, extending gains after Thursday’s more than 3% surge—the largest daily jump since last October—as geopolitical tensions dominated market sentiment. Prices were buoyed by renewed concerns over supply disruptions after President Donald Trump warned Iran of a ‘hard’ response if protesters were harmed. Meanwhile, U.S. actions in Venezuela remained in focus following the seizure of two oil tankers in the Atlantic, including one flying a Russian flag, underscoring Washington’s efforts to tighten control over energy flows and pressure Caracas. For the week, oil is poised for a third consecutive advance.

Gold failed to build on Thursday’s rebound near the $4,400 level and faced renewed selling pressure during Friday’s Asian session. The metal’s weakness comes as the U.S. dollar holds on to gains accumulated over the past two weeks, touching a near one-month high and weighing on the commodity. However, expectations of a dovish Federal Reserve stance are capping further dollar strength ahead of the closely watched U.S. Nonfarm Payrolls report due later Friday, helping to limit gold’s downside.