• No_Ads
Business
Shilling stable, seen firming due to tight liquidityPublish Date: Feb 08, 2014
Shilling stable, seen firming due to tight liquidity
  • mail
  • img
newvision

KAMPALA - The Ugandan shilling was stable on Friday in thin trading but was expected to strengthen next week due to scarce local currency liquidity.

Commercial banks quoted the currency of east Africa's third-largest economy at 2,465/2,471 to the dollar, compared with Thursday's close of 2,468/2,473.

"The market is flat in terms of activity although there's a shortage of shillings which has potential to boost the unit possibly next week," said Manohar Miryala, head of treasury at Crane Bank.

Soft demand for dollars, mostly from companies, has kept the shilling on a firm footing this year with traders saying the weak appetite for hard currency reflected sagging business activity.

Money market analysts have attributed slow business activity to what they say is the high cost of credit. Commercial banks' average lending rate, according to the central bank, stood at 22.5 percent in December, compared to the central bank's key policy rate of 11.5 percent currently.

On Thursday the Ugandan government announced it had signed a memorandum of understanding with three foreign oil companies - Britain's Tullow Oil, France's Total and China's CNOOC - that should kick off investments in key infrastructure necessary for crude production to start.

"Even in the medium to long-term the outlook suggests a strong shilling ... I expect to see capital investments to start flowing into the oil sector after yesterday's deal," said a trader at a leading commercial bank.

"Although most of the procurements will be in dollars, some of them will be in the local currency and the shilling will benefit from these conversions by oil investors."

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
Karuma dam facing shortage of skilled manpower
The contractor of the long-awaited Karuma hydropower dam has said the project is lacking electricians and skilled manpower to operate machines....
UTODA, consultant in sh157m row
A row has erupted between Uganda Taxi Operators and Drivers Association (UTODA) and a consultant who is demanding sh157m as unpaid fees....
East African tourist visa launched in Moscow
The issuance of the East African tourist visa has been launched in the Russian Federation by the embassies of Uganda, Kenya and Rwanda....
Nzeyi explains decisions in Commerce bank case
Prominent businessman Amos Nzeyi made his long-anticipated testimony in the case where he alongside other business partners purportedly changed the name of Kigezi bank to National Bank of Commerce....
Workers have a right to unionise
There are close to 40 registered labour and trade unions in Uganda, but few, if any can successful hold an annual general meeting due to dismal membership....
Tobacco farmers accused of wasting earnings
REVELATIONS made by MPs from tobacco growing areas depicted how excited tobacco farmers upon receiving cash bought alcohol and used it to wash legs and hoes...
WIll the national ID registration process be completed in the scheduled 4 months timeframe?
Yes
No
Can't Say
follow us
subscribe to our news letter