Business
Shilling weakens, pressured by growth forecast cut
Publish Date: May 03, 2014
Shilling weakens, pressured by growth forecast cut
  • mail
  • img
newvision

KAMPALA - The Ugandan shilling fell on Friday, sapped by demand from energy and manufacturing firms and on reduced growth expectations after the central bank cut its forecast for economic output.

Commercial banks quoted the currency at 2,525/2,535 down from Wednesday's close of 2,515/2,525.

Ugandan markets were closed for Labour Day on Thursday.

"The market is receiving a lot of end month-related demand from the manufacturing and energy sectors," said Shahzad Kamaluddin, a trader at Crane Bank.

Also, "the central bank's new forecast for growth signals the economy isn't doing very well... that's not good news for the shilling."

Earlier on Friday, Bank of Uganda cut its growth forecast for the 2013/14 fiscal year to 5.7 percent from 6 percent while holding the benchmark interest rate at 11.5 percent.
 
David Bagambe, a trader at Diamond Trust Bank Uganda, said the shilling was also being undermined by market expectations of a slowdown in hard currency flows from offshore investors.

"Rates are going down and we don't think demand for Ugandan debt from foreign investors will remain the same," he said.

"... We expect a dip in inflows from these people which inevitably will hit the shilling."

At a Treasury bill auction worth 120 billion Ugandan shillings this week, the weighted average yield fell across all maturities.

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
Egypt to offer projects to domestic, foreign investors
Egypt will offer a slew of projects to domestic and foreign investors at a conference in March aimed at kick-starting an economy battered by years of political unrest....
Students’ involvement in investment negotiations is key
University students have been urged to get involved in negotiations of trade, bilateral and investment agreements rather than leaving it to technocrats and politicians....
Practices to add to your daily business schedule
At the end of each day’s work, find time to identify three things that went well. Once you identify them, ask the critical question such as, “Why did ‘X’ go well?”...
Dubai insurer set for Uganda
The new firm will enter into strategic partnerships to oversee, design, and control processes of selected licensed brokers....
Textile manufacturers want the national textile policy implemented
Textile industries are pushing for the implementation of a National Textile Policy. They also want government institutions compelled to buy textiles from local companies....
BOU has no influence on govt spending
There have been allegations in the media that Bank of Uganda printed money for the 2011 elections, which led to the high inflation rate at the time....
Should workers be subjected to a 4% Health Insurance Tax??
Yes
No
Can't Say
follow us
subscribe to our news letter