Business
BOU to hold emergency meeting as shilling hits 4,240 per dollar
The shilling crossed the 4,000 mark early last week. At the same time, petrol and diesel major fuel distributing companies made changes to their price display boards. Petrol is now selling around sh6,850 to sh6,900 a litre. Diesel is selling between sh6,900 to sh7,180 per litre.
In the money markets, liquidity conditions improved modestly, with overnight funding rates easing to an average range of 9.80% - 10.00%.
By: Ali Twaha, Journalist @New Vision
KAMPALA - The Uganda shilling continued to weaken against the dollar on Tuesday, opening at 4160/4170 and sliding to a fresh all time low of 4240/4250 ahead of the Bank of Uganda (BOU) monetary policy meeting tomorrow (October 14).
Traders said the move was driven by strong interbank dollar demand amid limited hard currency supply, which kept the market significantly bid for most of the day.
“The sentiment shifted in the afternoon after the Central Bank announced an emergency Monetary Policy Committee (MPC) sitting scheduled for tomorrow. The announcement triggered a wave of dollar selling, allowing the shilling to recover part of its earlier losses and pare back some of the day's depreciation, closing stronger at 4120/4130,” Absa bank noted in a report.
“The sentiment shifted in the afternoon after the Central Bank announced an emergency Monetary Policy Committee (MPC) sitting scheduled for tomorrow. The announcement triggered a wave of dollar selling, allowing the shilling to recover part of its earlier losses and pare back some of the day's depreciation, closing stronger at 4120/4130,” Absa bank noted in a report.
In the money markets, liquidity conditions improved modestly, with overnight funding rates easing to an average range of 9.80% - 10.00%. The improvement in liquidity followed increased market availability of shilling funds, although conditions remained relatively tight overall.
The shilling crossed the 4,000 mark early last week. At the same time, petrol and diesel major fuel distributing companies made changes to their price display boards. Petrol is now selling around sh6,850 to sh6,900 a litre. Diesel is selling between sh6,900 to sh7,180 per litre.
Uganda does not pump its own fuel yet, so every tanker carrying this fuel is paid for in dollars. When the dollar costs more shillings, the same litre costs more at the pump, even if the world oil price has not moved by much.
The shilling crossed the 4,000 mark early last week. At the same time, petrol and diesel major fuel distributing companies made changes to their price display boards. Petrol is now selling around sh6,850 to sh6,900 a litre. Diesel is selling between sh6,900 to sh7,180 per litre.
Uganda does not pump its own fuel yet, so every tanker carrying this fuel is paid for in dollars. When the dollar costs more shillings, the same litre costs more at the pump, even if the world oil price has not moved by much.