The Ugandan shilling continued its depreciation against the dollar on Wednesday. Absa traders attributed the weakening to robust demand for hard currency from corporates and interbank players.
The local currency closed Wednesday’s trading session at levels of 3808/3818, slightly lower than the day’s opening at 3805/3815. The consistent decline reflects ongoing pressure on the shilling.
Overnight yields averaged 10.91%, indicating the prevailing interest rates in the short-term lending market. Tight liquidity in the money markets was observed, attributed to mid-month tax obligations, adding strain to the financial system.
To address the liquidity situation, the Bank of Uganda conducted a treasury bill auction during the day. Yields in the 91-day, 182-day, and 364-day tenors cleared at averages of 9.310%, 12.097%, and 13.003%, respectively. These rates provide insight into the returns offered by government securities of varying maturities.
The high demand for the dollar and the resulting pressure on the shilling highlight the challenges faced by Uganda’s currency in the current economic landscape. Continued monitoring of the forex market will be crucial for assessing any further impact on the shilling’s value.
