High dollar demand weakens shilling

Nov 14, 2010

THE shilling closed the week weaker at 2,285/95 from the 2,275/85 levels seen at the start of the week, dealers noted on Friday.

By Vision Reporter
THE shilling closed the week weaker at 2,285/95 from the 2,275/85 levels seen at the start of the week, dealers noted on Friday.

“Persistent dollar buying off-shore banks and corporate customers mainly in the energy sector pushed the shilling to lows of 2,290/2,300 on Wednesday, prompting the Central Bank to intervene by selling dollars.

“This was the second time that Bank of Uganda has intervened to sell dollars around the 2,300 level in the week,” Kenneth Kitungulu, a forex dealer at Standard Chartered Bank, said in a weekly report.

He pointed out that the Bank of Uganda also conducted a three-year Treasury bond auction, maturing on 24-10 -2013 on Wednesday.

“Rates were up 0.47% to 11.15% with the range of successful bids between 10.50 and 11.85%. With some government releases during the week, there was increased participation for bonds.

“We expect the shilling to trade within 2,270/2,310 range over the coming week,” Kitungulu said.

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