KAMPALA – On Wednesday, the Uganda shilling showed slight strength against the US dollar, closing at 3715/3725 compared to the opening rate of 3720/3730. This modest appreciation came as a result of healthy flows from commodities and remittances, despite limited activity in the demand for dollars.
The money markets were generally liquid during the session. Overnight yields remained high, averaging 9.95%, as reported by Absa. This high yield indicates that while the money markets had sufficient liquidity, the cost of borrowing overnight remained elevated.
Additionally, the Bank of Uganda conducted a treasury bill auction on Wednesday. The auction results revealed the following average yields for the different tenors: 91-day bills at 9.310%, 182-day bills at 13.000%, and 364-day bills at 13.503%. These yields reflect the interest rates investors are willing to accept for these short-term government securities.
Overall, the local currency’s performance was supported by stable commodity and remittance flows, while the elevated overnight yields indicated a continued demand for short-term liquidity in the market.
