Business
BOU sold $68m to steady the shilling, says Atingi-Ego
The currency had weakened to lows of 4,500 last month before it recovered in early November to trade at near 4,050 levels. Headline inflation rose to 5.8% in October from 4.6% in September, with core inflation climbing to 4.4% from 3.7%.
The Bank of Uganda (BOU) Governor Michael Atingi-Ego. (File)
By: Ali Twaha, Journalist @New Vision
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The Bank of Uganda (BOU) Governor Michael Atingi-Ego has revealed that the central bank sold about $68m (sh278b) in limited interventions to ease pressure on the shilling in recent weeks.
Speaking during the Monetary Policy Committee meeting on November 9, Atingi-Ego said the sales were deliberately restrained.
“We have intervened to the tune of about $68m to be precise since this challenge began. We could have intervened more, but we were mindful of the fact that intervention does not solve the problem that we are facing today. It doesn’t. You can only intervene in order to smooth out some of the transition, but it should not be the balance here,” he said.
Atingi-Ego remarks come as the bank held its Central Bank Rate at 12%, after an emergency increase from 9.75% in October. The currency had weakened to lows of 4,500 last month before it recovered in early November to trade at near 4,050 levels. Headline inflation rose to 5.8% in October from 4.6% in September, with core inflation climbing to 4.4% from 3.7%.
“People should not look at the central bank as the institution that can fix the currency. No, we can only try to stabilize the currency in the short term. But long-term stability of the currency depends on how strong our current account balance is. We need to upgrade the supply side rather than from the demand side. The central bank is managing from the demand side. And over the long run, it’s not sustainable. It is the supply side that’s going to stabilize this currency,” he said.
Atingi-Ego remarks come as the bank held its Central Bank Rate at 12%, after an emergency increase from 9.75% in October. The currency had weakened to lows of 4,500 last month before it recovered in early November to trade at near 4,050 levels. Headline inflation rose to 5.8% in October from 4.6% in September, with core inflation climbing to 4.4% from 3.7%.
“People should not look at the central bank as the institution that can fix the currency. No, we can only try to stabilize the currency in the short term. But long-term stability of the currency depends on how strong our current account balance is. We need to upgrade the supply side rather than from the demand side. The central bank is managing from the demand side. And over the long run, it’s not sustainable. It is the supply side that’s going to stabilize this currency,” he said.