Wednesday, 19 August 2015 18:56
KAMPALA: The Ugandan shilling was stable on Wednesday but was likely to weaken in the coming days due to higher demand for dollars from importers as the month draws to a close.
At 0916 GMT, commercial banks quoted the shilling at 3,545/3,555, unchanged from Tuesday.
“We have been getting a lot of inquiries from importing corporates,” said Shahzad Kamaluddin, trader at Crane Bank. “So there’s a clear sign some demand from these will be coming through … I expect it to pose a depreciation risk.”
Most of the inquiries were from big firms in manufacturing, telecoms and energy sectors and also medium-sized importers of consumer goods, Kamaluddin said.
The local currency has been trading around 3,500 per dollar in recent days although the overall tone has been bearish as a globally strong greenback ahead of expected US interest rate hikes weighs on market sentiment.
A trader from a leading commercial bank said some importers had stayed out of the market in recent days on expectations the greenback would trade cheaper but some were starting to figure that was unlikely to happen and would soon re-enter the market.
The shilling has weakened by 22 percent against the greenback so far this year.
The depreciation has prompted the Bank of Uganda (BoU) to hike interest rates four times in a row this year to try to curb inflation.
The BoU raised its benchmark lending rate this month to 16 percent from last month’s 14.5 percent.
