KAMPALA: The Ugandan shilling weakened on Tuesday as banks covered short dollar positions ahead of an expected shortage of liquidity due to tax payments.
At 0908 GMT, commercial banks quoted the shilling at 2,575/2,585, slightly down from Monday's close of 2,570/2,580.
"The pressure is being driven by demand from some of the players who are short and are just covering positions," said Sage Daniel Muganza, a trader at Centenary Bank.
Benon Okwenje, a trader at Stanbic Bank, said the shilling was likely to remain within sight of the 2,600 psychological level as tax payments reduce liquidity in the money markets, making it slightly more expensive to stock up dollars.
"I expect corporate tax payments for the full fiscal year to make liquidity tight ... we might actually see some conversions," he said.
Uganda's fiscal year ends in June and big companies are expected to meet their full-year corporate tax obligations late this month.
Comments
Comments are closed for this article.