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Shilling stable, seen bearish on corporate demandPublish Date: Jan 06, 2014
Shilling stable, seen bearish on corporate demand
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KAMPALA - The Ugandan shilling was unchanged in slow trading on Monday but was expected to come under some moderate pressure in the days ahead on the back of a recovery in corporate demand for dollars.

Commercial banks quoted the currency of east Africa's third largest economy at 2,523/2,528, unchanged from Friday's close.

"We're anticipating demand from corporates to return to normal levels gradually over the coming weeks," said Faisal Bukenya, head of market making at Barclays Bank Uganda.

"This is likely to put the shilling under some limited pressure."

A trader at a leading commercial bank said he expects strong corporate demand from foreign companies in the medium-term as most would be paying 2013 dividends, but added that the shilling's tone in the first quarter was likely to be bearish.

Market players also say confidence in the local currency could be shaken by a potential decline in inflows spurred by the conflict in neighbouring South Sudan and the fall in yields on government securities.

South Sudan has been one of Uganda's major export markets but the fighting there, which started mid December, has cut off all trade routes between the two countries depriving Uganda of a key source of hard currency.

 

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