Wednesday, 07 October 2015 17:54
KAMPALA: The Ugandan shilling was stable for a second straight day on Wednesday, as slow consumer spending depressed appetite for hard currency among importers.
At 0943 GMT commercial banks quoted the shilling at 3,680/3,690, unchanged from Tuesday.
“Importers are telling us sales are slow, which is consequently limiting their (dollar) demand,” said Faisal Bukenya, head of market making at Barclays Bank.
“Some of the buyers are also staying away because they consider the dollar’s current level to be expensive.”
A trader from a leading commercial bank said the soaring consumer prices, partly spurred by the shilling’s sharp depreciation this year, meant consumer spending was likely cooling.
Uganda’s year-on-year headline inflation jumped last month to 7.2 percent, from the previous month’s 4.8 percent.
A market note from Bank of Africa said the local currency, though stable, still had a depreciation bias and that it was “expected to continue surrendering more ground with the existing country’s import bill.”
Data from the central Bank of Uganda (BoU) shows the country’s current account deficit widened to $ 2.4 billion in fiscal year 2014/15 (July-June) from the previous year’s $ 2.1 billion and is projected to deteriorate further to $ 2.8 billion in 2015/16.
Authorities in the east African country say the deficit is being widened by a surge in imports of equipment to facilitate development of energy and transport projects.
