The Uganda shilling extended its losses against the dollar in today’s trading session, pressured by strong greenback demand from the energy, manufacturing, and telecommunications sectors, according Absa Bank Market Report.
According to the report, the demand outweighed the limited dollar inflows from commodity exports, remittances, and non-profit organizations. The shilling was seen trading at 3755 / 3765 levels on Friday morning compared to the week’s opening levels of 3690 / 3700. Shilling vulnerability is still expected to rotate around corporate activity and the Middle East tensions, with an expected new trading range of 3650 – 3820 in sight
The market was awash with liquidity with overnight and one-week rates averaging within 6.75%-10.00% range. The Bank of Uganda continued its liquidity management operations, to absorb excess funds from the markets through conducting a 7-day mop-up repo. The Bank of Uganda is scheduled to return to the primary market on 29th July for a Treasury Bond auction where the benchmark 2-year, 5-year, 15-year and 25-year will be re-opened.
The USD/KES pair traded under pressure during the week as renewed Middle East tensions weighed in on the shilling triggering demand from corporates. The shilling was seen trading at 129.30/129.50 on Friday morning compared to the week’s opening of 129.10 / 129.20. Looking ahead, the Kenya shilling is expected to trade within the 129.20–129.90 range with support likely to come the Central Bank is demand pressures persist.
Brent crude oil remained above $100 a barrel on Friday and was poised to post a weekly gain of nearly 14%, driven by growing concerns that escalating tensions in the Middle East could severely disrupt global oil supplies.
On Friday morning the United States carried out its 13th consecutive day of strikes on Iran, while both Washington and Tehran showed little willingness to engage in immediate negotiations. President Trump further intensified concerns by warning of significant military retaliation against Iran and the Houthi movement if additional attacks on Red Sea shipping occur.
These comments followed attacks by Iran-aligned Houthi fighters on two Saudi oil tankers in the Red Sea, an important alternative export route for Saudi crude, particularly as ongoing conflict continues to affect vessel movements through the Strait of Hormuz.
In response to the heightened risks, some Asian importers have begun evaluating alternative shipping routes for Saudi oil, including transit through the Suez Canal and around the Cape of Good Hope in Africa.
The US dollar index hovered around 101.3 on Friday morning, remaining close to its highest level in three weeks as newly announced tariffs by President Donald Trump heightened concerns about a fresh wave of global trade barriers.
Under the revised tariff measures, imports from major trading partners such as Mexico, Canada, the United Kingdom, and India will be subject to 10% duties due to concerns related to alleged forced-labor practices. The dollar was further supported by growing expectations that the Federal Reserve could maintain a tighter monetary policy stance, as escalating tensions in the Middle East continue to push energy prices higher. Strong US labor market performance has also reinforced confidence in the economy, adding to demand for the greenback.
The euro slipped below $1.139 on Thursday after the European Central Bank (ECB) kept its key interest rates unchanged at its July policy meeting, a decision that broadly matched market expectations. ECB officials adopted a cautious and data-driven tone, emphasizing the need to assess incoming economic information before making further policy adjustments, particularly given ongoing uncertainty surrounding energy price developments.
The British pound declined to $1.336 on Thursday, marking its weakest level in ten days, as markets reacted to recent fiscal policy announcements and expectations of a more hawkish interest rate environment. Finance Minister John Healey highlighted increasing costs for businesses and continued pressure on household living expenses, reinforcing investor concerns that inflation in the UK could remain elevated for longer.
Gold prices fell toward $4,030 per ounce on Friday, extending a nearly 2% decline compared to Thursday’s price action, as surging oil prices fueled by the escalating Middle East conflict strengthened the case for tighter US monetary policy.