THE Bank of Uganda has made massive intervention to redeem the Uganda shilling from continued depreciation.
THE Bank of Uganda has made a massive intervention to redeem the Uganda shilling from continued depreciation.
The shilling that had lost over sh300 this week to trade at sh2710/2750 against the dollar was rolled back to 2400/2650 trading levels.
Shamir Manji, a dealer at Hydery said; â€œThe money put in by the Central Bank might help to slow the shillingâ€™s depreciation but it wonâ€™t stop it.â€
The shilling this week hit an-all-time low of 2,725 as the increasing global demand for the dollar continued. This was weaker than Tuesdayâ€™s close of 2,635/2,650.
The impact of the weak shilling is hitting businesses hard, forcing them to share costs with consumers.
The Bank of Uganda last week pointed at the Eurozone debt crisis as the major cause of the weakening shilling.
This is pushing investors with assets in euros to convert them into dollars, leading to the high global demand for the dollar.
The high local demand for dollars by oil companies, manufacturers and multinationals paying dividends to their foreign owners against poor dollar inflows is also piling pressure on the Uganda shilling.
The Central Bank promised to continue intervening in the market by selling or buying dollars, but did not intervene in the market yesterday.
Experts argue that the Central Bank should stabilise the exchange rate by injecting more dollars in the market and blacklisting speculators that it accuses of driving the shilling to record lows against the dollar.
Central bank steps in to save shilling