By Sylvia Juuko
CENTRAL bank governor Emmanuel Tumusiime Mutebile has again warned speculators who created instability in the foreign exchange market that he will deal with them.
â€œI will not hesitate to take whatever measures are necessary to burn the fingers of speculators. When I said it last time, I was not believed. I hope the recent action by the central bank will warn speculators not to tempt me,â€ he said.
The central bank recently fended off an offshore attack on the shilling, creating stability of foreign exchange rates. The central bank cancelled a sh65b Treasury Bill offer last month, putting the brakes on further shilling appreciation, a move that surprised speculators.
A strong shilling that was driven by market fundamentals had attracted unusual interest from speculators, further increasing the local currencyâ€™s value.
Mutebile said the recent instability in the foreign exchange market had disrupted the monetary policy.
He said the central bank would continue to ensure price stability and financial sector soundness in a transparent manner.
The governor was addressing market players during a workshop on formulating a five-year financial markets development plan.
He said the plan would address limitations to Ugandaâ€™s financial markets. Some other issues to be addressed include banking and capital market reform, pension reform, options for financial market development in rural finance, leasing and additional financial products.
â€œThe small size of the Ugandan financial sector is a major obstacle to development of financial systems, resulting into systems that tend to be limited in scope, more expensive and of poor quality,â€ he explained.
Mutebile observed that the financial sector had prospects of expanding due to a liberalised economy that was open to flow of capital, participation of foreign intermediaries and EAC integration.
He cited challenges that need to be addressed like maintenance of financial market stability amidst increased inflows of capital.