Corporate demand for dollar pushes Uganda shilling to close week at 2,620
Monday July 11, 2011
The shilling tumbled against the dollar having opened 2,510/20 to close 2,610/20 as demand for the US currency persists.
“The market saw sizeable demand from corporates despite the levels being too high,” Denis Mashanyu, a forex dealer at Standard Chartered Bank, said in a weekly brief.
He disclosed that the Central Bank stayed out of the market as political pressure built up.
In the debt market, Mashanyu added, activity remained subdued “as liquidity remains a big challenge as the short-end of the curve remains very high.”
“The Central Bank continued to fund through reverse repurchase agreements in the seven-day tenor in the region of 15%-17%,” he pointed out.
“Next week (this week), we expect the shilling to remain weak with 2,550 providing initial support and 2,700 as the key resistance level.
“Liquidity is likely to remain tight as the Central Bank issues 91-day, 182-day and 365-day treasury bills on July 13,” he said.
The shilling slipped to a low of 2,710 against the dollar last week on strong dollar demand from the oil sector, speculative trading and panic buying, before a Central Bank dollar sale sparked a recovery.