Uganda shilling gains more against dollar
KAMPALA-The Uganda shilling has rallied against the dollar on the back of an upsurge in inflows from Ugandans living abroad and offshore investors seeking to purchase attractive government debt at an auction on Wednesday.
KAMPALA-The Uganda shilling has rallied against the dollar on the back of an upsurge in inflows from Ugandans living abroad and offshore investors seeking to purchase attractive government debt at an auction on Wednesday.
The central bank of east Africa's third largest economy is expected to conduct a 95 billion shillings ($37.62 million) Treasury bond auction on Wednesday.
The two-year bond has a coupon rate of 10 percent.
At 0748 GMT commercial banks in Kampala quoted the local currency at 2,495/2,505 against the U.S. currency, stronger than Friday's close of 2,520/2,530.
"The debt is very attractive and we're seeing a huge interest from offshore investors," said Ahmed Kalule, a Treasury dealer at Bank of Africa.
"So inflows from these investors plus those from Ugandans overseas coming for Christmas are meeting very low demand in the market and the shilling is drawing energy from that."
Bank of Uganda (BoU), which launched an aggressive round of monetary policy tightening in July, left its benchmark Central Bank Rate (CBR) for December unchanged at 23 percent last week from November.
The bank's decision followed the release of the country's Consumer Price Index (CPI) data showing Uganda's headline inflation slowed to 29 percent year-on-year in November from the previous month's 30.4 percent.
Kalule said the shilling, which hit its all time low of 2,901 on Sep. 23, was finding its support and resistance levels at 2,480 and 2,560 levels respectively.
"Market sentiment still points toward a further appreciation of the unit (shilling) as the market continues to witness low customer appetite for the dollar and expected dollar conversions from NGOs," said a market report from Stanbic Bank Uganda.
The shilling has recovered 13.8 percent of its value against the dollar since its Sep. 23 record low but it's still 6.4 percent down against the dollar in the year to date.