The Uganda shilling recovered some of the losses recorded earlier in the week, supported by a slowdown in corporate demand for the Greenback, which helped ease pressure on the local unit, according to Absa Bank Monday market report.
The currency strengthened during the session, closing at 3770 / 3780 compared to opening levels of 3785 / 3795. Additional support came from month-end foreign currency inflows, particularly from remittances and not-for-profit organizations, which boosted dollar supply in the market.
In the money markets, liquidity conditions continued to improve supported by maturities last week, with overnight and one-week funding rates averaging 9.75% and 9.90%, respectively. The Bank of
Uganda was active in its liquidity management operations, mopping up UGX 231 billion for two days to contain the excess liquidity. Furthermore, the central bank is scheduled to return to the primary market tomorrow for a Treasury Bill auction with UGX 350 billion up on offer. Yields are expected to remain relatively stable across all tenors.