KAMPALA: The Ugandan shilling rallied in volatile trading on Wednesday, strengthened by a dollar sell-off by commercial banks.
At 0951 GMT commercial banks quoted the shilling at 3,350/3,360, up from Tuesday's closing of 3,400/3,410. The shilling has lost 17.6 percent against the dollar this year.
"There's speculation in interbank that is fuelling significant selling of dollars in the interbank," said Shahzad Kamaluddin, trader at Crane Bank.
Traders, Kamaluddin said, were speculating that the appetite for hard currencies from corporates in sectors like energy, manufacturing and telecoms was not likely to return until the dollar reached levels of around 3,330.
Importer demand for dollars has been weak this week with some traders pointing to mid-month taxes that sucked up shillings that would otherwise be used to fund dollar positions.
The shilling's firmer tone was seen to be reinforced by still tight liquidity conditions, despite Tuesday's central bank injection of 40 billion shillings ($11.90 million) via a reverse repo.
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