Wednesday, 11 November 2015 17:28
KAMPALA: The Ugandan shilling fell on Wednesday, weighed down by interbank demand for dollars amid expectations that the US Federal Reserve will raise interest rates soon.
At 0926 GMT commercial banks quoted the shilling at 3,490/3,500, weaker than Tuesday’s close of 3,475/3,485. “Speculation that the Fed could raise interest rates in December is driving interest,” said a trader at a commercial bank, saying local players were building dollar positions.
The shilling, which has fallen more than 20 percent against the dollar this year, has also been hit by Uganda’s ballooning current account deficit, expected to reach 10.3 percent of gross domestic product in the fiscal year ending on June 30, up from 8.5 percent in 2014/15.
The budget deficit has also soared, expected to reach 7 percent of GDP in 2015/16, from 4.5 percent the previous year, with analysts linking the spending spike to presidential elections set for Feb. 18.
