The Uganda shilling depreciated against the US dollar at the end of this week due to a slight pickup in demand for the greenback, reversing its noticeable appreciation at the beginning of the week.
According to the Bank of Uganda, the shilling traded at Shs3,511.91 per US dollar buying and Shs3,521.91 selling on Friday at the opening of the day.
However, at midday, the shilling traded at Shs3,525.18 buying and Shs3,535.18 selling per US dollar, indicating depreciation.
Absa Bank Uganda’s analysis showed that the shilling opened the week trading at Shs3,510 per US dollar and selling at Shs3,520 and traded stronger against the US dollar for most of the week.
Acting Head of Trading at Absa Bank Uganda, Richard Nsubuga, attributed the shilling’s strength to renewed offshore confidence in the post-election outcome and portfolio inflows ahead of the Treasury bond auction.
“The local currency benefited from renewed offshore confidence in the post-election outcome, alongside portfolio inflows ahead of the Treasury bond auction, which attracted strong investor interest-particularly from offshore participants,” Nsubuga said.
Nsubuga explained that buy-side interest intensified as the manufacturing, telecommunications, and energy sectors joined the rally, accelerating dollar depreciation and pushing the shilling to Shs3,430 buying and Shs3,440 selling levels last seen in October 2025.
However, Nsubuga noted that the trend reversed after the auction, with offshore players returning to the market, combined with commodity-related flows and subdued corporate demand, weakening the shilling to trade at Shs3,515 buying and Shs3,525 selling.
“Following the auction, however, offshore players-both unsuccessful bidders and those taking advantage of price dips-returned to the market. This renewed demand, combined with commodity-related flows and subdued corporate demand, reversed the trend, weakening the shilling back trading at Shs3,515 buying and selling at Shs3,525, around the day’s opening levels,” he explained.
Regionally, the Kenyan shilling remained stable, closing the week around KES 129 per dollar, as demand and supply dynamics remained well balanced.
Globally, the US dollar index edged closer to 99, extending its gains for a fourth consecutive session and reaching its highest level in nearly a month.
“The move reflects investor positioning ahead of the December US jobs report, which could offer fresh insights into labor-market conditions and the Federal Reserve’s policy outlook,” Nsubuga explained.
Futures markets are currently pricing in nearly a 90 per cent probability that the Fed will leave rates unchanged at its January meeting, while still expecting at least two rate cuts later in the year.