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
Uganda
Uganda oil industry has entered the most crucial and most lucrative phase, energy ministry officials have said....
Kenya
It was a symbol for Kenya's growing well-heeled middle class: a vast supermarket crammed with flat screen televisions, imported wines and chilled cabinets of cheese and meats....
Aviation: Fastjet secures Entebbe, Dar route
FastJet completes the first of many flights between Dar es Salaam and Entebbe, reducing a trip of 12 hours to just over an hour on top of boosting tourism, business and ties between Uganda and TZ....
Private Sector to implement child-friendly business principles
The Ugandan business community has signed up to the implementation of international principles to respect children’s rights, eliminate child labour, provide young workers, and ensure safety of children....
Minister promotes cassava growing
Cassava farmers should add value to their produce to meet the rising demand for the crop in local and regional markets, finance state minister, Fred Jachan Omach, has said....
Parliament set to scrap taxes on agricultural inputs
The House is today poised to adopt a finance committee report that recommended that the proposed 18% Value Added Tax (VAT) on agricultural inputs and equipment be scrapped...
Will early retirement solve Uganda’s unemployment problem?
Yes
No
Can't Say
follow us
subscribe to our news letter