Buy-Import-Export Premium Grade UGANDA VANILLA BEANS Buy-Import-Export Un-Refined Raw SHEA BUTTER
The market this week generated a turnover of UGX 587m. Top traders were NVL and SBU, contributing 74% and 24% respectively. Activity on the NVL counter was boosted after the price fell 4.4% to UGX 650 at which it closed the week. UCL closed the market down 12.5% to UGX 35 while all other counters traded flat. The ALSI closed down 4.4% to 957.75 while the UGX/USD closed at UGX 2,470.
The central bank might be forced to raise the Central Bank Rate (CBR) in the coming months to counter the impact of the weakening UGX and rising fuel prices. Standard Chartered Bank reported that it would not adjust its base lending rate this month, due to market volatilities witnessed in the foreign exchange market, rising fuel prices and increasing food and commodity prices. The developments in the market might prompt the central bank to tighten its monetary policy again, thus causing a reversal of commercial banks’ decision regarding prime lending rates. Bank of Uganda recently lowered its CBR from 22% in Feb-12 to 21% for March-12 on the back of a 0.3% drop in inflation. So far only Stanbic Bank has moved to cut its lending rate from 28.5% to 27.5% on the UGX denominated loans effective 30 March 2012. The local unit has been losing value against major trading currencies, especially the greenback, with local forex traders quoting it at UGX 2,470 per USD as of Friday last week.
Cost of fuel in Uganda has increased as a litre of petrol is now selling at UGX 3,500 up from 3,300; diesel at UGX 3,350, UGX 280 higher while kerosene prices range between UGX 2,900 to UGX 2,950. This is the second time in a span of about three months that fuel prices have risen above the UGX 3,500 mark. The rise in pump prices, according to the Petroleum Marketers Association of Uganda, is attributed to the rise of the USD value against the UGX and a rise in the international prices of oil.
Inflation in East Africa may slow this year as food prices ease, while rising oil costs will probably boost imports and widen trade deficits according to the IMF. Kenya, Uganda and Rwanda have pushed up interest rates since last year to curb inflation after the worst drought in 60 years fueled food prices. While the impact of drought has eased this year, the price of brent has surged 16% in London since the beginning of year, adding to import costs.
The Ministry of Water and Environment has warned of heavy rain from March to May, likely to be characterised by flooding. As the country enters its major rainfall season, the eastern region where heavy rain has been forecasted is likely to experience floods while the mountainous areas have high chances of experiencing landslides. The forecast follows conclusions from the 30th Climate Outlook forum for the Greater Horn of Africa which took place in Rwanda in Feb-12.
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