Business
Ugandan shilling gains on weak dollar demand
Publish Date: Jan 08, 2014
Ugandan shilling gains on weak dollar demand
  • mail
  • img
newvision

KAMPALA - The Ugandan shilling gained on Wednesday, boosted by scant appetite for dollars, but traders said a drop in yields on government debt were a risk in coming weeks.

Commercial banks quoted the shilling at 2,517/2,522, up from Tuesday's close of 2,520/2,525.

"Demand for dollars is very sluggish because appetite from our corporate customers is still absent ... we're seeing the shilling picking up gains," said Faisal Bukenya, head of market making at Barclays Bank.

However, declining yields on government debt could put pressure on the shilling and erase Wednesday's gains, traders said.

"With the downward trend in yields, we're likely to see some of the offshore investors not rolling over their debt holdings once they mature," said Ahmed Kalule, trader at Bank of Africa. "If that happens, dollar flows will decline and the shilling will come under pressure."

At a Treasury bill auction on Wednesday worth 105 billion shillings ($41.67 million), rates on the 182- and 364-day paper dropped by more than 130 basis points. The yield on 92-day bills edged up slightly.

At the latest Treasury bond auction, worth 130 billion shillings on Jan. 2, yields on two- and five-year bonds fell by more than 80 basis points.

Offshore buyers of government debt are a key source of hard currency for Uganda, east Africa's third-largest economy. Confidence in the shilling could wobble if the lower yields curb the appetite for the debt, traders say.

Reuters

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Youth told to form groups for govt support on bee farming
Youth interested in bee keeping have been advised to form groups to be able to get extensive training and information support from government...
Mobile money customers shoot to 19.5m
Registered mobile money customers have increased from 17.6 million to 19.5 million between June 2014 and June 2015, the central bank has disclosed....
COMESA in drive to harmonise grain standards
The Common Market for East and Southern Africa (Comesa) met Friday to kick start the process of harmonizing standards of maize grain across the region, and interpreting the existing standards...
Farmers tipped on minting money from honey
A symposium of farmers from Tanzania and Uganda were told that the global demand for honey is currently overwhelming the supply in the market....
New car dealers want used motor vehicles phased out
As Uganda prepares to launch its first locally manufactured automobile to the market in 2018, new car dealers have appealed to the government to begin phasing out the importation of used motor vehicles on the market....
Export Promotions Board to train traders
Lack of awareness of trade procedures at border points among small scale traders is to blame for the low exports....
Do you support KCCA'S move to ban campaign posters from the city?
Yes
No
Can't Say
follow us
subscribe to our news letter