UGX Comes Under Depreciation Pressure, Breaches 2700

The shilling crossed the 2700 resistance level on Wednesday on account of increased demand from energy , manufacturing and to some extent offshore players that are profit taking.

A trader displays Uganda Shilling notes. IMF says there is likelihood of exchange rate depreciation as has already been observed in South Africa, Nigeria, Ghana and Zambia.
A trader displays Uganda Shilling notes. IMF says there is likelihood of exchange rate depreciation as has already been observed in South Africa, Nigeria, Ghana and Zambia.

FX inflows seem to have reduced considerably and given that this particular week, there is no government securities auction.

Under the current market conditions the shilling is poised to touch further lows. The market expectation is that the Central Bank is likely to swing into action and arrest the decline.

Going forward, the reality is that currency headwinds are unlikely to turn into currency tailwinds soon because of the lack of strong fundamentals, primarily the current account deficit.

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