Uganda Central Bank acts as shilling nears 3000-mark

Sunday, 14th August, 2011

The Uganda Central Bank sold an undisclosed amount of dollars to help the shilling rally against the greenback in the final minutes of trading on Friday, after the local currency sunk to another record low.

The Uganda shilling firmed to a settled price of 2,780 against the dollar at the market’s close, having touched an intraday low of 2,827.9, Thomson Reuters data showed.

Traders confirmed the Bank of Uganda had sold dollars but were not able to say how many.

“The Uganda shilling is expected to hover around 2,800 which remains the key psychological level unless we get a sudden huge demand from one of the key sectors which could drive us back to today’s (Friday’s) low levels,” said Lucas Ochieng, the head of Treasury at Orient Bank.

Dollar demand from the oil sector had helped drive the shilling south earlier in the day.

“The Uganda oil sector came in and bought a huge amount of dollars, possibly upwards of $10m, and interbank demand is also still high, so the shilling is under a lot of pressure now,” said Faisal Bukenya, the head of market-making at Barclays Bank.

He said uncertainties in the global economic environment were also adding to the shilling’s woes.

The New Vision Newspaper