KAMPALA – The Uganda shilling registered slight gains against the US dollar during Thursday’s trading session, supported by improved investor confidence and favourable liquidity conditions in the domestic money market.
The local currency closed the day trading at UGX 3,720/3,730 per US dollar, strengthening slightly from the previous session’s closing rate of UGX 3,725/3,735.
Market analysts attributed the shilling’s performance to renewed optimism in global financial markets following reports of easing geopolitical tensions in the Middle East.
Investor sentiment improved after indications that Iran had reached an understanding with Oman regarding shipping arrangements through the strategic Strait of Hormuz, easing concerns over potential disruptions to global trade.
Domestically, liquidity in Uganda’s money market remained stable, supported by government security redemptions and coupon payments, which increased the availability of funds within the banking system.
The improved liquidity helped keep short-term borrowing costs relatively low, with overnight lending rates averaging 9.75 percent, while one-week lending rates stood at approximately 10.00 percent.
Financial market participants expect the shilling to remain relatively stable in the near term, although its performance will continue to depend on demand for foreign exchange, global market developments and domestic liquidity conditions.
