The Uganda shilling recovered some ground against the dollar, trading at the 3620/3630 on Friday morning – from the 3635/3645, the level at which the spot market opened on Monday, according to Absa Bank Uganda weekly shilling update.

Dollar selling interest dominated the trading sentiment early in the week, ahead of the Treasury Bond auction on Wednesday where good local and offshore participation was anticipated.The sessions saw significant hard currency inflows from commodity exporters and inward diaspora remittances, outweighing the relatively low corporate demand and the muted offshore dollar buying compared to the previous weeks.

Looking ahead the shilling is poised to trade within the same wide range with a slight bias towards a stronger unit, underpinned by the seasonal dollar inflows and wanning corporate demand as we tend towards close of the calendar year. However, cautious trading will loom the market on the back of uncertainty about the trading activity of the offshore market players.

The yields in the Treasury Bond auction edged up for the 25year bond which printed at 17.95% from 16.00% in the previous sale, while the 15year and 5year bonds also cleared at higher levels of 17.75% and 16.25%, respectively compared to 17.65% and 16.20% in the previous auction. The 2year bond yield, however, was unchanged as it cleared at 15.75% the same level at the last sale.

A total of UGX 1.485 trillion in face value was accepted across the tenors representing 106.08% allocation against the UGX 1.400 trillion on offer while UGX 2.826 trillion was tendered by the investors – the government therefore borrowed up to UGX 1.440 trillion from the domestic market on Thursday when these securities were settle.

The Money Markets were liquid during the week with the interbank overnight and one-week yields averaging at 8.99% and 9.93%, respectively. UGX 1.440 trillion cash was withdrawn from the money markets – on the back of treasury bond settlements on Thursday, was matched off against the UGX 1.049 trillion in the repo maturities, UGX 413.385 billion in gross coupon payments – as well as pockets of treasury bill maturities. The excess liquidity was mopped up by the Bank of Uganda in a7-Day repo and in BOU Bills. The Central Bank has scheduled a Treasury Bill auction next week on 03 December 2025 Wednesday, with UGX 355 billion on offer.

The Kenya shilling traded under modest pressure during the week, at 129.65/129.90 on Friday morning compared to 129.90/130.10 on Monday, the lowest level the unit traded after a long stable trading range below the 129.50 mark, for the most part of the year. Demand was fairly balanced off with dollar inflows in the first have of the week, with the currency trading at 129.45/129.60 – however it was not long before the corporate demand for dollar outweighed the supply – resuming the buying pressure that saw the Kenya shilling trade towards the 130 handle once again. The Central Bank of Kenya (CBK) continues to monitor the spot market – in some cases selling dollars accordingly in the interbank. Looking ahead the Kenya shilling is expected to trade in a wider range driven by elevated trading activity on the selling and buying side of the currency pair.

The US dollar Index (DXY) traded around the 99.50 level on Friday morning compared to the 100 mark at the end of last week, as measured against a basket of six world currencies. The dollar marginally lost for three straight days during the week, touching the lowest of 99.42 before forming a consolidative price pattern this morning. The dollar may continue to trade under pressure on back of rising odds of the Federal reserve cutting rates in December.

The Pound sterling strengthened against the dollar, trading at 1.3220 level on Friday from the lows of 1.3179 traded on Monday – but it had touched 1.3270 during the week as the dollar continues to soften amid mounting expectations of a Fed rate cut in December 2025. UK Chancellor Rachel Reeves delivered her autumn budget on Wednesday, though the immediate market reaction turned out to be muted amid the upbeat growth forecasts for 2025. The UK’s bonds fell, as investors analyzed the economic impact of the Chancellor’s budget. Overall, the sterling is still expected to extend the winning streak in the coming sessions.

Brent crude oil price was unchanged week-on-week, trading at $63 a barrel on Friday – as the oil continues to head for the longest run of monthly losses in more than two years as the market looks ahead to an OPEC+ meeting and gauge US-led efforts to end the conflict in Ukraine. US presidential envoy Steve Witkoff is expected to visit Moscow next week. Brent oil has fallen 15% this year, with prices hurt by expectations for a global over supply of oil after OPEC+ restarted capacity, while oil producers outside the alliance also added supplies.