The Uganda shilling traded at 3490/3500 by mid-morning today, Losing Approximately 1.80% Against The Dollar This Week. The local unit’s consolidation seen last week in the strong region of 3425/3435 gave way to a sharp decline, after the offshore market players bought dollars from the spot market. This is according to Absa Bank Uganda weekly shilling updates.

On the local scene, demand was subdued early in the week but picked up later as the dollar buying momentum firmed up and the local commercial banks joined the buying spree. The currency pair recovery may cross the 3500 handle if the buying momentum intensifies. The shilling is projected to trade in a wider range revised price range of 3400-3450 in the near term.

The money markets were liquid during the week, prompting the Bank of Uganda to mop up the excess liquidity up to UGX 824 billion on Thursday. The interbank overnight and one-week rates averaged at 9.78% and 10.10%, respectively. The central bank had not scheduled any securities this week; however, a treasury bill auction was scheduled for next week on Wednesday with UGX 355 billion on offer.

The Kenya shilling remained stable this week as well, still exchanging in the same narrow range of 129.00 – 129.400 on the back of balanced trading activity that saw dollar inflows sufficiently match off the corporates and interbank demand. The outlook has no fundamental market changes that will see the shilling trade out of the current sideways price pattern in the near term.

The US dollar index (DXY) fell during the week to touch 98.10 levels on Friday, against a basket of six world currencies, from the highs of 99.45 during the week. The four-day consecutive fall put the dollar on track for its biggest weekly drop in more than two months, amid dovish signals from Federal Reserve officials. The dollar also softened as shares of regional lenders slumped on lending-standards concerns, and as political risks in Japan and France eased, with multiple factors hitting the dollar at once.

The Pound Sterling (GBP) advanced above the one-week high of 1.3470, taking advantage of a broad dollar retreat as traders priced in two Fed rate cuts by the end of 2025. Markets have remained very confident that the Fed will cut interest rates this month and are now pricing in close to a 95% chance of two rate cuts by the end of 2025. The Sterling upside appears capped by a risk-off market profile amid renewed geopolitical and US-China trade war concerns. By afternoon today, the markets had retreated to 1.3410 levels on the back of a fresh escalation in expectations that the Bank of England (BoE) will cut interest rates further this year.

Oil prices (Brent Crude) traded near $60 a barrel, on track to drop another 4% this week in its longest losing streak since March. On Friday, oil was heading for a third weekly decline as traders focused on growing signs of oversupply and the fallout from renewed US-China trade tensions. Investors worry that rising friction between the two biggest crude consumers could hurt global economic growth and energy demand. Recent reports suggest that President Trump will meet with his Russian counterpart, Vladimir Putin, to discuss ending the war in Ukraine, partially easing fears of further destruction of the Russian energy infrastructure.

Gold prices traded at the $4377 levels per ounce on Friday. The yellow metal has accelerated in recent weeks to reach a 63% gain in 2025 so far. Gold’s eye-popping prices are driven primarily by central banks and large institutions buying by the kilo as well as private collectors in the US who have seen their coins and bars skyrocket in value. Gold may be setting records due to unfavourable geopolitical dynamics, stock-market complacency, and economic risks stemming from renewed US-China trade tensions.