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Uganda Shilling Slips Vs Dollar, Seen Rangebound

visit this site more about http://cmareno.com/wp-includes/class-wp-locale.php geneva;”>Uganda Shilling Slips Vs Dollar, this http://chat.novaintermed.ro/wp-content/plugins/woocommerce/includes/wc-formatting-functions.php Seen Rangebound

stuff geneva; font-size: small; line-height: 115%;”>After plunging to its all-time record low against greenback in September last year, the currency of the coffee exporter is up 7.1 percent this year, buoyed by dollar inflows from offshore investors.

At 0818 GMT commercial banks in Kampala quoted the local currency at 2,310/2,320, weaker than Monday’s close of 2,300/2,310.

Foreign investors have been flocking to Uganda’s high-yielding debt since the central bank launched a four-month cycle of policy tightening in August last year.

Yields have started to drop, though, after Bank of Uganda (BoU) cut its policy rate for February by 100 basis points from January’s 23 percent after inflation slowed for a third consecutive month.

“Demand from the oil sector has exerted some pressure on the shilling which has pushed it higher (weaker) against the dollar,” said Walter Mananu, Treasury dealer at Bank of Africa.

“We don’t expect this demand to last though and I think we’ll keep in a tight range of between 2,305/2,335 in the coming months.”

Analysts say the shilling is likely to come under considerable pressure in the medium term as the country’s debt grows less attractive on the back of monetary policy easing.

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BoU has said it expects inflation in east Africa’s third largest economy to continue plunging and reach single-digit levels by December 2012 which could see its new policy easing cycle sustained for the next several months.

“Dollar demand in interbank market has also undermined the shilling….some banks are betting the dollar might climb in days ahead and taking positions now,” said Faisal Bukenya, head of market making at Barclays Bank.

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