Overview:
The Uganda shilling strengthened this week as a fragile Middle East ceasefire calmed investor nerves and reduced demand for the U.S. dollar. Market analysts project the local unit to trade within the 3660 to 3800 range in the near term.
KAMPALA — The Uganda shilling strengthened this week as a fragile ceasefire in the Middle East calmed investor nerves and reduced demand for the U.S. dollar.
The local unit traded at 3695/3705 on Friday morning, gaining ground from opening levels of 3740/3750 earlier in the week. Subdued market activity and weak corporate demand for dollars allowed interbank sellers to maintain control.
Traders said the improvement in sentiment followed a ceasefire between the United States and Iran, which helped steady global markets.
Richard Nsubuga, a currency market analyst at Absa Bank, said the shilling is projected to trade within the 3660 to 3800 range in the near term. Despite the weekly gains, the currency remains approximately 2% weaker year-to-date due to earlier risk aversion linked to global tensions.
Stephen Kaboyo, a market analyst, said the shilling appears to have settled into a range as markets monitor the situation. He noted that any further escalation in the Middle East remains a critical geopolitical dynamic that could trigger market volatility.
In the debt market, yields on Treasury bills declined across all tenors during last week’s auction. The 91-day, 182-day and 364-day papers cleared at 10.002%, 11.001% and 12.249%, respectively. The Bank of Uganda accepted 332.7 billion shillings, roughly 94% of the amount on offer.
The central bank is scheduled to return to the market for a Treasury bond sale April 15.
Regionally, the Kenya shilling also gained ground, ending the week at 129.00/129.25 per dollar, up from 130.05/130.25 at the start of the week.
Globally, the dollar index hovered near 99, weighed down by softer inflation expectations and shifting forecasts for U.S. interest rates. Minutes from the Federal Reserve’s March meeting showed policymakers remain concerned the conflict could sustain inflation, though markets still expect a rate cut later this year.
In commodities, Brent crude climbed above $96 per barrel following strikes on Lebanon and disruptions near the Strait of Hormuz. However, prices remained on track for a weekly drop of more than 10% following the ceasefire agreement.
Gold prices stayed above $4,700 per ounce, marking a third straight weekly gain as the softer dollar and lingering risks supported demand for safe-haven assets.
In the cryptocurrency market, Bitcoin jumped approximately 5% following the ceasefire announcement, reaching an intraday high of $72,753. Ethereum rose as much as 9% to around $2,273 before settling near $2,243.