The Uganda shilling opened the first trading day of 2026 weaker, pressured by strong demand for hard currency from corporates in the energy and manufacturing sectors, according to market analysts.

Richard Nsubuga, Absa Bank Uganda’s Ag. Head of Trading said that after closing 2025 on a firm footing at 3615/3625, early Friday demand pushed the local unit to 3630/3640 levels, drawing offshore sellers back into the market, which left the shilling at 3625/3635.

“Overall, the shilling was stronger, appreciating by about 2.05% in 2025. Analysts expect the shilling to remain range-bound between 3580 and 3650 as market participants gauge direction ahead of the general elections later this month.”

He explained that money markets regained momentum during the week as players returned from the Christmas break. Interbank overnight and one-week rates averaged 9.63% and 9.83%, respectively, while the Bank of Uganda conducted open market operations to manage liquidity.

Bank of Uganda returns to the securities market next week, with a Treasury Bond auction where the benchmark 3-year, 10-year, and 20-year maturities will be reopened for Ugx 230 billion, Ugx 330 billion, and Ugx 430 billion in face value, respectively.

“Across the border, the Kenyan shilling held steady, closing Friday at 128.90/129.10 as demand and supply balanced out. On the global stage, the U.S. dollar slipped to around 98.2, extending its sharpest annual decline in eight years. The greenback lost roughly 9% in 2025, weighed down by policy uncertainty following President Donald Trump’s tariff measures, expectations of Federal Reserve rate cuts, narrowing yield differentials, and investor concerns over fiscal deficits and the Fed’s independence.”

Sterling traded at $1.34, marking a 7.5% annual gain—the biggest since 2017—supported by diverging rate-cut expectations between the Bank of England and the Fed, and a calm Autumn budget that eased pressure on the pound. The BoE cut rates four times last year but signaled a slower pace ahead.

In commodities, WTI crude edged toward $58 after its steepest annual drop in five years, as traders awaited OPEC+’s January 4 virtual meeting, where the group is expected to maintain its November decision to pause further output hikes.

Gold continued its historic rally, climbing to about $4,360 per ounce after posting its strongest annual performance in over four decades. The metal surged nearly 65% in 2025, buoyed by sweeping U.S. tariffs, expectations of lower borrowing costs, geopolitical uncertainty, sustained central bank buying, and renewed inflows into gold-backed ETFs.