Grapevine

Shilling holds steady against dollar after central bank rate cut

The recent cut in the central bank rate by the Bank of Uganda has had a minimal impact on the foreign exchange market, with the Uganda Shilling trading within a tight range against the US dollar.

The official exchange rate at the Bank of Uganda on Friday showed the shilling trading at Shs3,724.73 per US dollar buying and Shs3,734.73 selling per US dollar. In the open market, the exchange rate was slightly different, with the shilling opening at 3725/3735 levels and closing at 3722/3732 levels.

Ms Catherine Kijjaggulwe, the Head of Trading at Absa Bank Uganda, said: “Money markets were fairly liquid on Friday with overnight yields at averages of 10.19 per cent, the mid-month tax remittances are due during the coming week. Bank of Uganda is scheduled to hold a Treasury bill auction on Wednesday, August 14, 2024,” she said.

"The cut in the Central Bank Rate by 25 basis points did not have any impact on the currency markets during the week. Commodity flows continued to trickle into the market but were quickly balanced by the demand from the manufacturing, energy, and telecom sectors," she added.

Looking ahead, Ms Kijjaggulwe projected that the currency is likely to remain capped within a range, with demand expected to remain robust in the coming weeks and flows remaining consistent.