Tuesday, 06 October 2015 17:37
KAMPALA: The Ugandan shilling was stable on Tuesday, with scant demand for hard currency, and traders said they expected the currency to remain in a tight trading range before a rate decision by the central bank due to be announced in mid-October.
At 0934 GMT, commercial banks quoted the shilling at 3,680/3,690, unchanged from Monday’s close.
“Demand from corporates has trailed off,” said Ahmed Kalule, trader at Bank of Africa. “I think all eyes will be on the rate decision we anticipate some firming if a hike materialises.”
Kalule said the shilling would oscillate in the 3,670-3,700 range in the period to the rate decision.
The Bank of Uganda’s monetary policy committee is expected to meet on Oct. 15 to announce its central bank rate for the next two months.
The bank is expected to raise rates after a jump in consumer prices that pushed year-on-year headline inflation to 7.2 percent last month from 4.8 percent in August.
A market note from Stanbic Bank said a scheduled Treasury auction could “have a slight effect on the currency if there is good interest from offshore (investors).”
This week, the central bank is due to sell re-opened 2-, and 10-year Treasury bonds worth a total of 180 billion shillings ($ 48.91 million).
Yields on Ugandan debt have risen this year, mirroring the central bank’s policy tightening.
Some traders say rates are now at a level that should be attractive to offshore buyers.
