Shilling Steady Amid Low Corporate Activity and Tax Payments
On Tuesday, the Ugandan shilling traded within a narrow range of 3725 to 3735 against the US dollar, reflecting a relatively quiet trading environment. Corporate activity was subdued as businesses concentrated on meeting their mid-month tax obligations, leading to limited demand for the dollar, according to traders.
Despite the low trading volume, there were enough dollar inflows to meet the minimal demand for the currency. The subdued activity meant that there was little fluctuation in the exchange rate.
However, money markets experienced tight liquidity conditions, largely due to the mid-month tax payments. According to Absa, overnight yields rose to an average of 10.44% as a result of these liquidity pressures.
The Bank of Uganda is scheduled to hold a treasury bill auction on August 14. This auction is expected to provide some relief and ease the current liquidity constraints in the market.
