Tuesday, 17 November 2015 17:57
KAMPALA: The Ugandan shilling strengthened on Tuesday, helped by a shortage of local currency in the money markets and subdued dollar demand.
At 0945 GMT, commercial banks quoted the shilling at 3,435/3,445 to the dollar, stronger than Monday’s close of 3,450/3,460.
“I understand some banks are short on shillings,” said Ali Abbas, trader at Crane Bank.
“Corporate demand for the dollar is not there, I would say the shilling is getting support from that, too.”
To alleviate the liquidity scarcity, the central bank injected 40 billion shillings ($ 11.70 million) using a two-day reverse repurchase agreement at 17 percent.
Abbas said the injection was unlikely to reverse the shilling’s gains, however.
Bank of Africa said in a market note it expected some volatile trading, “with no significant support for the greenback today.”
The shilling, which is 18.8 percent weaker against the greenback so far this year, is seen trading with a generally weakening tone in the coming months, partly weighed down by rising government spending ahead of elections in February.
