The Uganda shilling opened the month trading under pressure in Thursday’s session, weakening to new all-time lows of 3970 / 3980 in the morning, according to Absa Bank daily market report.
The sharp move was largely driven by renewed interbank dollar demand, stemming from offshore investors unwinding portions of their local bond portfolios, which increased demand for foreign currency in the market. The local unit depreciated by approximately 1% during the session, closing at 3960/3970, compared with opening levels of 3920/3930.
In the money markets, liquidity conditions continued to improve following month-end releases, providing further relief after the prolonged liquidity squeeze experienced in recent sessions.
Consequently, funding rates eased to average around 10.50% as access to liquidity improved across the market.
Meanwhile, the central bank remained active in managing liquidity conditions, absorbing excess funds through repo operations and the sale of Bank of Uganda Bills to maintain an appropriate balance in the interbank market.
