KAMPALA: The Ugandan shilling lost ground on Thursday as confidence in the local currency sagged after the International Monetary Fund (IMF) lowered its GDP growth forecast for the East African nation.
At 0933 GMT commercial banks quoted the shilling at 3,370/3,380, weaker than Wednesday's close of 3,340/3,350.
"The cutting of growth is a big negative for the shilling," said Ahmed Kalule, trader at Bank of Africa.
"The implication is that we now expect lower output levels which will negatively impact exports and inflows."
The IMF trimmed growth outlooks for 2015/16 (Jul-Jun) to 5 percent from a previous 5.8 percent, saying the lower expectations were due to likely tightening of credit conditions spurred by the central bank's hike of its policy rate.
The Bank of Uganda, the central bank, has since April raised its benchmark rate by 600 basis points to 17 percent, aiming to curb inflationary pressures fuelled by a weak currency and soaring food costs.
The shilling has strengthened since hitting an all-time low of 3,690/3,700 on Sept. 29 but is still 18 percent weaker against the greenback so far this year.
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