The Uganda shilling traded within a relatively narrow range during today’s session. Early morning dollar inflows from commodity exporters provided support to the local unit, allowing it to strengthen to levels of 3885/3895, according to Absa Bank Uganda Wednesday market report.
According to the report, these gains were reversed in the afternoon as strong offshore demand for foreign currency emerged, pushing the shilling weaker to close the day at 3910 / 3920. Looking ahead, the shilling remains vulnerable to further depreciation pressures, driven by continued demand from offshore investors and persistent uncertainty surrounding the evolving Middle East conflict.
At today’s Treasury bond auction, yields cleared higher on the two benchmark re-openings, with the 2-year and 25-year bonds settling at 12.00% and 16.25%, respectively. The benchmark 5-year bond was largely unchanged, clearing at 13.74%, while the newly introduced 15-year benchmark cleared at 15.25%, attracting accepted bids of only UGX 89.4 billion.
Overall, the auction recorded a strong outcome, with UGX 1.2 trillion in face value accepted, representing an 86% acceptance rate. The largest allocation was concentrated in the 25-year maturity, which accounted for UGX 1.036 trillion of the total accepted amount.
Secondary market activity remained largely subdued following the release of the auction results, with market participants adopting a cautious stance post-auction.
