KAMPALA: The Ugandan shilling firmed on Tuesday as importers held back in expectation that the currency will strengthen against the dollar because of tight money market liquidity. At 0843 GMT commercial banks quoted the shilling at 3,655/3,665, against Monday's close of 3,665/3,675.
"Most importers are staying out of the market as they wait for the dollar to climb down (weaken)," said Faisal Bukenya, head of market-making at Barclays Bank. "However local currency liquidity is also very tight it is limiting interbank buying."
Traders have said the scarcity of shillings was also forcing some banks to trim their hard-currency positions.
So far this week the central bank has stayed out of the money market.
The bank has drained liquidity from the market in the past to support the shilling, which has lost 24.4 percent against the dollar this year.
Investor fears over political uncertainty ahead of next year's elections, strong demand from importers and a deteriorating trade balance have kept the Ugandan currency under pressure since January.
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