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
Smartphone sales on the rise in East Africa
A few years ago, owning a smartphone was something to thump your chest about. Those days are becoming increasingly numbered...
MTN awards outstanding Ugandan women
The 2015 edition of MTN Women in Business Awards have seen Mrs. Barbara Ofwono, the proprietor of Victorious Schools scoop the overall Award of MTN Women in Business SME CEO of the year, applause for outstanding use of MTN Business’s overall service /prepositions to grow her business from one small...
Museveni to Asia: Uganda ready for investment
President Yoweri Museveni has called on the Asian bloc to work with the Africa to guarantee a shared prosperous future.“When we hear that the Asian countries are working “towards a Community of Common Destiny,” we are very happy. The Asian bloc should work with the African Continent to guarantee a...
Procuring and Disposing Entities (PDEs) of both public and private bodies have been advised to dialogue with bidders who do or are interested in doing business with them...
Shilling to weaken further, foreign currency denominated loans to suffer
Bankers have expressed concern over the continued depreciation of the shilling, saying the volatility will exert pressure on foreign currency denominated loans...
Access to finance biggest obstacle for MSMES
The biggest obstacle to business growth faced by Micro, Small and Medium Enterprises (MSMEs) in Uganda is access to finance, according to a survey released by FSD Uganda...
Should police arrest parents who do not take their children to school?
Yes
No
Can't Say
follow us
subscribe to our news letter