Shilling stable against dollar
Jul 12, 2011
KAMPALA-Lower demand for dollars kept the Ugandan shilling flat for the third straight session on Tuesday, but traders said it might weaken slightly in the days ahead. Commercial banks in Kampala exchanged the shilling at 2,600/2,620 against the dollar, unchanged from Monday’s closing level.
KAMPALA-Lower demand for dollars kept the Ugandan shilling flat for the third straight session on Tuesday, but traders said it might weaken slightly in the days ahead. Commercial banks in Kampala exchanged the shilling at 2,600/2,620 against the dollar, unchanged from Monday’s closing level.
“Demand has eased off, which has given the shilling energy to hold its ground against the dollar for now.
“I think the current level will sustain for the day,†said Faisal Bukenya, the head of market making at Barclays Bank.
The local currency slipped through a series of record lows and hit 2,710 against the dollar on June 30, dragged down by strong dollar demand from the oil sector and panic dollar buying, before a Central Bank dollar sale sparked a recovery.
The shilling’s steep drop against the greenback last month provoked widespread anger among business people who said an expensive dollar was eroding their profit margins.
Traders shut their shops for two days last week, demanding the Government should fix the exchange rate to curb their losses.
However, President Yoweri Museveni dismissed the alarm over a weak shilling in an article published in the local press last week, saying a weaker local currency would boost tourism and the sagging export sector.
“The Uganda shilling may remain stable today though a depreciation is more likely in the days coming,†said a market report from Bank of Africa Uganda.
Analysts say the shilling is likely to remain under pressure against the dollar in the short-to-medium-term until Uganda starts earning petrol dollars.
The country discovered commercial oil deposits in the west in 2006 and crude production is due to commence early next year.
However, full scale exports are not expected until around 2014. The declining shilling is forcing the Bank of Uganda to tighten its monetary stance, the move analysts observe would lead commercial banks to adjust their lending rates upwards.
“Demand has eased off, which has given the shilling energy to hold its ground against the dollar for now.
“I think the current level will sustain for the day,†said Faisal Bukenya, the head of market making at Barclays Bank.
The local currency slipped through a series of record lows and hit 2,710 against the dollar on June 30, dragged down by strong dollar demand from the oil sector and panic dollar buying, before a Central Bank dollar sale sparked a recovery.
The shilling’s steep drop against the greenback last month provoked widespread anger among business people who said an expensive dollar was eroding their profit margins.
Traders shut their shops for two days last week, demanding the Government should fix the exchange rate to curb their losses.
However, President Yoweri Museveni dismissed the alarm over a weak shilling in an article published in the local press last week, saying a weaker local currency would boost tourism and the sagging export sector.
“The Uganda shilling may remain stable today though a depreciation is more likely in the days coming,†said a market report from Bank of Africa Uganda.
Analysts say the shilling is likely to remain under pressure against the dollar in the short-to-medium-term until Uganda starts earning petrol dollars.
The country discovered commercial oil deposits in the west in 2006 and crude production is due to commence early next year.
However, full scale exports are not expected until around 2014. The declining shilling is forcing the Bank of Uganda to tighten its monetary stance, the move analysts observe would lead commercial banks to adjust their lending rates upwards.