The Uganda shilling posted notable gains against the US dollar on Tuesday, appreciating from opening levels of 4500/4510 to an intraday high of 4340/4350, before closing the session at 4380/4390, according to Absa Bank daily market report.
The recovery was largely driven by subdued dollar demand and a healthy supply of foreign exchange inflows, which helped alleviate pressure on the local unit and supported the shilling’s rebound throughout the day.
Liquidity conditions in the banking sector remained relatively tight, reflecting the continued impact of the recent central bank policy rate hike. The resulting contraction in shilling liquidity kept funding costs elevated, with overnight and other short-term money market rates averaging around 12.50% during the session.
Bank of Uganda will conduct a Treasury Bond auction today where the benchmark 2-year, 5-year, 15-year and 25-year will be re-opened.
