The Uganda shilling nursed losses testing 100 day low touching 3600 technical level , pressured by substantial demand from commercial banks, energy and manufacturing sectors. The Uganda shilling trend was similar to its peers in the region where the Kenya and Tanzania currencies were equally bearish.
In the fixed income, the yields have bottomed out as investors expect interest rates to start rising as government leans towards the domestic banking system to fund part of the upcoming fiscal year budget. Yields have held flat for most of Q2 and Q3 of the current year.
In the global markets, the dollar climbed and swung to a two decade high after US inflation print ramped up concerns around aggressive rate hikes boosting its safe haven appeal. The surge was further propelled by weaknesses in its major rivals.
In energy markets, oil prices fell with demand outlook dented by the Covid lockdowns in China and growing recession risks while strong dollar demand crude more expensive for buyers using other currencies. Brent crude traded at 103.97 dollars per barrel.
In the coming weeks, the shilling is expected to continue battling strong headwinds emanating from external and domestic factors which are shilling negative. In the same breath the last quarter of the financial year tend to be higher volatility period for the shilling.
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