Uganda Central Bank sells dollars, shilling firms

Wednesday, 24th August, 2011

The Ugandan shilling recovered from early lows against the dollar on Wednesday after the Bank of Uganda stepped into the market to sell the U.S. currency.

The Ugandan shilling slipped to trade at 2,820.10 against the dollar on Wednesday, just shy of its all-time low of 2,827.9 hit on Aug. 12.

"There was sudden heavy dollar demand in the interbank market this morning, possibly driven by speculation," said Faisal Bukenya, head of market making at Barclays Bank.

"The central bank's sale of dollars caused the shilling to rebound and now we're quoting it at 2800/2810," he said.

Hammered for much of the year against a backdrop of high inflation, which has also reduced offshore appetite for Ugandan debt, the shilling has tumbled to string of record lows against the U.S. currency.

Uganda is selling Treasury bills worth 95 billion shillings ($33.9 million) over a range of maturities on Wednesday.

The New Vision Newspaper