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Ugandan Shilling Up A Touch On Easing Interbank Demand Pressure
By Elias Biryabarema
21/08/2013
KAMPALA (Reuters) - The Ugandan shilling was little changed on Wednesday after demand pressure for greenbacks eased, pointing to a slightly firmer currency in the days ahead if inflows rise.
At 0831 GMT commercial banks quoted the shilling at 2,580/2,590, stronger than Tuesday's close of 2,585/2,595.
"Normally we get some inflows from NGOs (non-governmental organizations) at month-end," said a trader at a leading commercial bank.
"And if they outweigh the normal surge in demand from importers we could see further gains for the local unit."
Most local NGOs, who get their donations in hard currency, make conversions at the end of the month to pay salaries and meet a range of other operating expenses.
Traders said appetite by players in the interbank had cooled off, giving the shilling a boost.
"Secondly, corporates are also staying out because they believe there's room for the dollar to come down to around 2,570 which they consider a good price to buy," said Faisal Bukenya, head of market making at Barclays Bank.
Money market analysts say corporate appetite for dollars has been largely depressed this year, in part because of the central bank's reluctance to lower borrowing costs which has subsequently stifled credit flow to the private sector.
Bank of Uganda (BoU) maintained its benchmark Central Bank Rate (CBR) at 12 percent for the first five months of this year, before cutting it in June to 11 percent.
It has since again left it unchanged at 11 percent in both July and August.
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