KAMPALA: The Ugandan shilling strengthened on Monday as the central bank drew some liquidity out of the market and corporate demand for dollars diminished.
At 0941 GMT, commercial banks quoted the shilling at 2,608/2,613, stronger than last Friday's close of 2,610/2,615.
"The central bank is mopping up surplus shillings, which has pushed up the local unit a bit," said David Bagambe, trader at Diamond Trust Bank. " I think what is also helping is that demand from corporate firms is really low."
The central bank has not yet said how much excess cash was pulled out of the interbank market.
Bagambe said the shilling was likely to maintain its strength through the week, underpinned by expectations of demand for shillings from offshore investors buying Ugandan debt. Traders said an uptick in interest rates has whetted appetites for the debt.
This week Bank of Uganda (BoU) is due to sell 145 billion Ugandan shillings worth Treasury bills, followed by an auction of 180 billion shillings worth of Treasury bonds of two- and 15- year tenors next week.
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