KAMPALA: The Ugandan shilling fell slightly on Friday as commercial banks snapped up dollars to cover short positions, traders said.
End-of-month dollar inflows from coffee sales and any further mopping up of shilling liquidity by the central bank look set to offer the local currency support in coming sessions, some market players said.
By 1105 GMT commercial banks quoted the currency of east Africa's No. 3 economy at 2,510/2,520 to the dollar, weaker than Thursday's close of 2,505/2,515.
"Short position covering by some banks put the shilling under pressure," Crane Bank trader Shahzad Kamaluddin said.
"We're likely to get the usual end-of month-inflows especially from exporters of commodities like coffee. These will push the shilling back up," he said.
Traders said the central bank had again drained liquidity from the money market on Friday, though it was not immediately clear how much had been taken out.
Next week the Bank of Uganda will auction Treasury bills of all maturities worth 120 billion shillings ($47.81 million), less than in the past few weeks.
"I am not anticipating a lot of offshore funds from this debt auction and I see a depreciation risk there," Diamond Trust Bank trader David Bagambe said.
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