Ugandan shilling steady against the US Dollar 20-06-2012r
The Ugandan shilling was steady for a second day on Wednesday, unmoved by the outcome of a Treasury bond auction, and traders said they saw it holding stable in coming days due to thin corporate dollar demand. At 1248 GMT commercial banks in Kampala quoted the shilling at 2,485/2,495 to the dollar, from 2,480/90 at Tuesday's close. "We're in the last month of this financial year and what we're hearing from some of our biggest clients is that they're preparing for full year corporation tax payments," said Thaib Lubega, trader at Stanbic Bank. "So they're using up their shillings for taxes so we anticipate demand for dollars to remain low through this month which will keep the shilling stable in the 2,470-2,495 range." Although some market players had previously indicated the shilling was likely to draw modest gains from dollar inflows into a Treasury bond auction, it remained unmoved on Wednesday afternoon after the auction results were released. The results showed the oversubscribed 10 and three-year papers worth 200 billion Ugandan shillings returned weighted average yields of 15.3 and 15.2 percent respectively. The 10-year bond had a yield of 13.2 percent when it was last sold in February last year while the three-year bond had a yield of 15.5 percent at its last auction on April 25. Faisal Bukenya, head of market making at Barclays Bank Uganda, said yields on Ugandan debt yields were likely to continue inching down in the short term as the central bank loosens its monetary policy stance. "But the decline won't be steep because the central bank is also keen to keep them at levels supportive of the shilling," he said. Bank of Uganda this month cut its key policy rate to 20 percent from 21 percent in May, saying it needed to stimulate credit growth to the private sector.