Uganda Yields Tumble At Auction, Shilling Holds Steady

viagra 100mg geneva; font-size: small;”>The weighted average yield dropped to 15.5 percent at the auction of 100 billion shillings ($39.92 million) of three-year Treasury bonds from 21.1 percent at a sale in January, results of the sale released by Bank of Uganda showed.

At 0119 GMT commercial banks quoted the currency of East Africa’s third-largest economy at 2,505/2,515 to the dollar, unchanged from Tuesday’s close.

Traders forecast the local currency was likely to hold steady ahead of the key economic data due at the end of April.

“There were no offshore investors, or their participation was negligible, because we haven’t seen any significant conversions,” said Faisal Bukenya, head of market making at Barclays Bank.

“We’ll remain trading around the 2,500 level going forward until debt yields rise again comfortably above inflation.”

Some analysts expected a small rise in yields, saying the Central Bank’s decision to halt cuts in its key rate this month reflected its eagerness to keep Ugandan debt attractive to offshore investors.

The bank left its benchmark interest rate unchanged at 21 percent this month although year-on-year inflation fell sharply last month.

Greenback inflows from foreigners investing in Ugandan debt are a key prop of the economy, which lacks a strong export base.


A slump in yields and an unexpected interest rate cut last month triggered a plunge in the shilling to a low for the year of 2,620 on March 6.

Ahmed Kalule, a trader at Bank of Africa, said the shilling was likely to remain stable over the next few days as the market awaits the release of this month’s inflation data and May’s CBR.

“I don’t see a significant factor that’s likely to move the shilling in any major way until that key data comes through,” he said.

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