Uganda shilling firms against the US dollar -13-April 2012
The Ugandan shilling firmed against the dollar on Friday, on the back of greenback inflows from aid agencies and traders expected the local currency to gain further next week helped by offshore investors buying into government debt. At the 1300 GMT market close, commercial banks quoted the currency of east Africa's third largest economy at 2,500/2,510, from Thursday's close of 2,510/2,520. "Some non-governmental organisations were converting their dollar holdings today which pushed up the shilling," said Brenda Akumu, a trader at Kenya Commercial Bank Uganda. "I think we might see these gains go into next week if yields at the auction remain at their current levels or go up." The Bank of Uganda is scheduled to sell Treasury bills of various maturities worth 120 billion shillings ($47.7 million)on Wednesday and traders expect yields to inch up, helped by a pause in monetary policy easing. Despite a steep fall in inflation last month BoU held its benchmark Central Bank Rate at 21 percent this month, after two consecutive cuts in the previous two months. The bank said persistent inflationary risks, particularly from high food prices, were still a concern. Uganda's inflation dropped to 21.2 percent in March from 25.7 in February. "I foresee the (T-bills) rates either climbing slightly but even if they remained at the current levels, they're still competitive," said a trader at a leading commercial bank. "We'll probably see some offshore conversions which might lend a bit of energy to the shilling." At the last auction on April 4, the weighted average yield on the benchmark 91-day paper rose to 18.1 percent from 17.4 at previous sale, although the longer-term 182 and 364-day bills edged lower.