The Uganda shilling caught a breather in the early part of week but edged lower against the resurgent dollar at close of week as demand picked up mainly from the energy sector. Trading was in the range of 3750/60.
On the monetary policy front, the Central bank hiked the policy rate. The heightened risks to inflation and the shilling have greatly increased the likelihood of a more aggressive interest rate path.
In the regional markets, it was more of the same in Kenya and Tanzania, unmatched demand kept the currencies on the edge.
In the fixed income yields sustained an upward trajectory as flows to emerging markets continued to dwindle. International investors remain net sellers of riskier assets.
In the global markets, the US dollar rose to a fresh 20 year high as other major currencies tumbled. The rising energy prices continued to cast a long shadow over the global economy but bolstering the US a currency safe haven appeal.
Going forward on the USD/UGX pair, the dollar is likely to remain supported by the global developments while the UGX will remain under pressure with recovery of previous weeks losses seeming unlikely to sustain undercut by expected significant rebound in demand.
