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Ugandan Shilling Firms On Scarce Liquidity
A woman counts U.S. dollars at a money changer in Yangon May 23, 2013. PHOTO By Reuters/Soe Zeya Tun.
By Elias Biryabarema
24/08/2013
KAMPALA (Reuters) - The Ugandan shilling strengthened on Friday, riding on conversions by banks looking to beef up their local currency positions amidst scarce liquidity.
At 1049 GMT commercial banks quoted the currency of east Africa's third largest economy at 2,565/2,575, stronger than Thursday's close of 2,575/2,585.
"Liquidity in the market is tight and banks are doing conversions to ease up the tightness on their shilling positions," said Brenda Akumu, trader at KCB Uganda.
"We expect some maturities next week which could reduce the scarcity of shillings but the unit is still likely to remain leaning on the stronger side."
A conservative monetary policy stance by the central bank has kept the local currency largely confined to a stable range of 2,560-2,600 this year, and analysts say depressed aggregate demand is likely to keep the shilling on a strong footing at least in the short term.
Players also say end-month inflows mainly from non-governmental organisations looking for shillings to pay salaries could underpin further gains by the local currency next week.
"Market outlook suggests marginal gains for the shilling as end month flows hit the market next week on the back of very limited corporate activity," said Stephen Kaboyo, managing director at Alpha Capital Partners.
He said the shilling would trade in 2,555/2,575 range.
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