KAMPALA: The Ugandan shilling weakened modestly on Monday on the back of strong demand for dollars from commercial banks.
At 0926 GMT, commercial banks quoted the shilling at 2,858/2,868, weaker than Friday's close of 2,853/2,863.
"Much of the appetite is interbank driven," said Benon Okwenje, trader at Stanbic Bank. "The general consensus is that the shilling's outlook remains weak on the back of this interbank demand."
But he said mid-month corporate tax payments, which typically lifts demand for shillings, could offer some respite for the Ugandan currency.
The shilling, which came under sharp pressure last week and prompted the central bank to sell dollars, is now 3.1 percent weaker against the US currency so far this year.
A stronger dollar on global markets and demand for dollars from companies seeking to pay dividends to foreign shareholders have been the main drivers, traders said.
Faisal Bukenya, head of market making at Barclays Bank said the BoU had taken out a total of 245.5 billion Ugandan shillings worth of excess liquidity on Monday.
The seven-day repo was taken at 11 percent and Bukenya said the mop-up could also ease some of the depreciation pressure.
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