Thursday, 08 October 2015 16:44
KAMPALA: The Ugandan shilling firmed slightly on Thursday amidst sluggish demand as importers and other buyers stayed on the sidelines ahead of a long weekend.
At 1001 GMT commercial banks quoted the shilling at 3,675/3,685, slightly stronger than Wednesday’s close of 3,678/3,688.
“The local unit is drawing support from an absence of demand,” said Faisal Bukenya, head of market making at Barclays Bank.
Bukenya said appetite from importers was especially low as a long weekend approached. Friday is a public holiday in Uganda as the east African country will be celebrating its 53rd independence anniversary.
He said the shilling was likely to remain range bound in the coming days, underpinned by tepid appetite from corporates. So far this year the shilling is 24.7 percent weaker against the dollar.
Traders see its outlook in the coming months as inclined toward depreciation amidst worries over political uncertainty ahead of presidential elections next year.
Rising public spending, much of it aimed at shoring support for the incumbent President Yoweri Museveni, is also adding to those worries.
A trader from a leading commercial bank said traders were likely to trim their greenback positions next week ahead of a widely anticipated rate hike by the central bank. Policymakers are due to meet on October 15.
Razia Khan, Africa chief economist at Standard Chartered, said in a note she expected Bank of Uganda to hike its Central Bank Rate (CBR) by 100 basis to 17 percent after a jump in inflation.
