Shilling steady, seen stronger on dollar inflows

KAMPALA - The Ugandan shilling was steady on Wednesday and was expected to appreciate in the days ahead as the central bank mopped up liquidity and dollars flowed in from offshore investors buying debt.

Commercial banks quoted the currency of east Africa's third-largest economy at 2,453/2,458, little changed from 2,452/2,457.

"The repo that the central bank did today coupled with suppressed demand for dollars will give the shilling a bullish tone going forward," said David Bagambe, a trader at Diamond Trust Bank. "However, the shilling will also derive a bit of energy from inflows from foreign investors who are targeting Ugandan debt."

Bank of Uganda, the country's central bank, issued a seven- day repo that was taken at 11.5 percent. It did not disclose how much it sucked out of the market.

The bank also sold Treasury bills worth 165 billion shillings ($67.26 million). The yield on the benchmark 91-day paper rose to 9.557 percent from 9.266 percent at the last sale.

The shilling has kept its footing against the greenback this year, underpinned by sluggish importer appetite for hard currency, the liquidity mop-ups by the central bank and inflows from offshore investors.

Faisal Bukenya, the head of market making at Barclays Bank, said the shilling was likely to find resistance at 2,450 and support at 2.470 in coming days.