Shilling watch: Bank of Uganda mops up excess dollars to build up national reserves

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It was a bull run for the local currency in all the trading sessions of the week, drawing support from the surge in seasonal flows that boosted foreign exchange supply.
The surplus market conditions gave the Central Bank ample head room to purchase dollars to build up national reserves.
The local currency was quoted at 3524/3534 compared to 3,548/3,558 last week.
In Kenya, the shilling weakened and hit a new all-time low as demand from across sectors dealt a blow on the unit. Trading was in the range of 111.80/112.00.

In the fixed income, Treasury bill yields slightly weakened with the 91 benchmark instrument trading at 6.555% while the 182 and 364 day papers followed a similar trend. Demand hit an all-time high as seen in the bid to cover ratios across the yield curve.

Globally inflation fears pressured Wall Street and buoyed the dollar after data showed US consumer prices surged at the fastest pace since 1990, boosting the case for faster Federal Reserve policy tightening.
Outlook for African currencies indicate that Nigeria and Uganda currencies may trade with a firm tone against the dollar next week, as Kenya, Zambia and South Africa are likely to be on the back foot, while Tanzania shilling is expected to hold steady.

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The writer works with Alpha Capital Forex Bureau: For competitive Forex Rates VISIT Plot 12 KAMPALA ROAD-CHAM TOWERS SUITE 43: call: 0414-580619, 0392-612648

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