Friday, 11 September 2015 16:59
KAMPALA: The Ugandan shilling was stable on Friday, supported by subdued demand for the dollar, but traders said it was likely to come under pressure again next week when the central bank resumes its dollar purchasing programme.
At 0927 GMT commercial banks quoted the shilling at 3,660/3,670, unchanged from Thursday’s close.
“One key factor to look out for is a signal from Bank of Uganda on resumption of the reserve build up,” said Stephen Kaboyo of Alpha Capital Partners.
“This is likely to reverse the stability and drive the currency to further lows.” The Bank of Uganda (BoU) typically buys about $ 5 million daily for reserve build up but traders said it has been absent from the market for about two weeks.
BoU has in the past suspended the foreign exchange purchase programme to help curb pressure on the shilling whenever it has weakened sharply.
Faisal Bukenya, head of market making at Barclays Bank, said demand from corporates was weak as firms appeared unwilling to take up dollars above the 3,660 level.
The shilling has lost 24.4 percent of its value against the greenback so far this year, prompting the central bank to tighten its monetary policy stance.
BoU has hiked its benchmark Central Bank Rate by 500 basis points this year to 16 percent.
