The Shilling recouped its losses from 2515/25 levels trading below 2500 during the week (from August 27 to 31) before weakening again after the inflation figures for August came out at 11.9% from the 14.3% the previous month, said Dennis Mashanyu, forex dealer with Standard Chartered Bank Uganda.
August consumer price data on Friday showed headline inflation slowed for a sixth straight month to 11.9% from July's 14.3%, driven by slowing food price growth.
Core inflation, which the central bank targets also declined to 11.5% from 15.4% in July.
Mashanyu said the weaker shilling sentiment is due to the easing policy by Bank of Uganda which continues to hold with most offshore investors showing no appetite for Ugandan assets.
He said liquidity in the short end of the curve remained tight despite yields on long dated papers coming off ahead of the expected rate cut next week.
“Next week we expect the bid tone to hold with 2500 support level on the downside and 2530 on the top,” he said.
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