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Dollar demand in energy, manufacturing sectors outweighs inflows

The Uganda shilling opened the week a tad weaker at 3,815 or 3,825 compared to last week’s closing of 3,810/3,820.

Dollar demand from corporates in the energy and manufacturing sector was seen outperforming the existing inflows from commodity exporters and remittance firms. The local currency is expected to continue trading largely within the 3,800-3,850 range in the near term.

According to Richard Nsubuga, trader corporate and investment banking (CIB) markets at Absa bank Uganda, money markets were relatively tight on Monday with overnight yields averaging 10.65 per cent.

The Kenya shilling opened the week trading relatively stable within the 120.30-126.00 range within corporate demand persisting during the session despite some dollar selling by the Central Bank of Kenya. The unit is expected to continue trading within this range in the coming days.

“The dollar index extended gains above 110 against a basket of currencies on Tuesday, moving closer to its highest level in 20 years, as investors digested strong US housing data in a week that will see the federal reserve hike interest rates for a third straight time. US policymakers are expected to deliver a 75 basis point increase on Wednesday to tame elevated inflationary pressures,” he said

West Texas Intermediate (WTI) crude futures swung between small gains and losses at around $85.5 per barrel (Shs 326,347) on Tuesday, after a 0.7 per cent gain in the previous session, as investors balance global growth fears against optimism over fuel demand consumption in China, while major producers struggle to increase output and meet demand.

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