By Samuel Sanya
The Bank of Uganda (BoU) has spoken out about the possibility of printing a sh100,000 note saying that the current economic conditions do not merit the introduction of the bank note.
This comes two days after the Central Bank governor Emmanuel Mutebile reacted to concerns of the parliamentary committee on the national economy about the possibility of introducing the higher shilling denomination to stem the current 30.5%, runaway inflation.
“The Bank of Uganda is not contemplating and has no immediate plans to introduce a sh100,000 note. Indeed, the Governor, made it clear to the MPs that the Bank had no intention of changing its currency structure at the moment,” reads the November 11th statement to the media.
“It should be noted that the Governor’s remarks were in response to a question from Members of Parliament who wanted to know, whether given the upward trend of inflation, the Bank might consider the introduction of a Shs.100,000 banknote,
“Inspite of the current high inflation of 30.5%, the conditions do not merit the introduction of a sh100,000 banknote.”
The Central Bank pointed out in their communication that the introduction of higher denomination banknotes is for public convenience in carrying out high value transactions and that any future developments on the currency structure will be reviewed in line with prevailing economic conditions.
Meanwhile, the shilling has edged higher against the dollar this Friday as the tight monetary stance currently being observed has made the shilling scarce forcing Banks to sell some of their dollars on the market.
Faisal Bukenya, the head of market making at Barclays Bank Uganda said in an interview that the shilling is likely to trade between sh2,585/2,635 next week, from sh2625/2,635 buying and selling respectively, a week earlier.
"There's a shilling scarcity in the market and banks were selling their dollars to strengthen their shilling positions,” he noted
“I see the market trading stable around 2,600 since inflows from offshore investors appear balanced by demand from the energy sector."
The Central Bank is due to sell sh120bn in 91, 182 and 364 day treasury bills with this week’s sh95bn, 2-year Treasury bond being oversubscribed by sh169.6bn according to media reports. This drove yields on the debt instruments to 21.85% from 15.21%.
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Central Bank clarifies on sh100,000 note