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Ugandan Shilling Firms Slightly On Tighter Liquidity
By Elias Biryabarema
24/09/2013
KAMPALA (Reuters) - The Ugandan shilling firmed slightly on Monday due to persistently weak demand for dollars among importers.
Commercial banks quoted the shilling at 2,535/2,545 at the 1300 GMT close, stronger than Friday's close of 2,548/2,553.
Benon Okwenje, trader at Stanbic Bank, said commercial banks were dumping dollars due to lack of corporate appetite.
Money market analysts say the central bank's tight monetary policy stance has stifled consumer spending and kept a lid on the flow of imports.
Meanwhile offshore investor interest in high-yielding African currencies has grown since the U.S. Federal Reserve unexpectedly decided against winding down its stimulus programme just yet.
The shilling has gained 1.1 percent against the greenback since last week's Fed announcement.
"The market is also tight on shillings and we could see more gains in the course of the week," said Ahmed Kalule, trader at Bank of Africa.
Kalule said the rate on overnight funds had surged to about 12 percent from between 5-7 percent a few days ago.
The Bank of Uganda this month hiked its policy rate to 12 percent from 11 percent, saying it was moving to contain inflationary pressures.
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