KAMPALA: The Ugandan shilling was little changed on Monday although traders said the currency was still vulnerable to losses because of expected demand for dollars from manufacturing, telecoms and energy companies.
At 0952 GMT commercial banks quoted the shilling at 2,675/2,685, unchanged from Friday's close.
"We still expect significant demand from players in the manufacturing, telecoms and energy sectors," said Faisal Bukenya, the head of market making at Barclays Bank. "I believe in the short term the shilling will remain biased on the weakening side."
Bukenya said the central bank had drained excess liquidity via a seven-day repo on Monday, which could cushion the shilling. Bank of Uganda removed a total of 255 billion shillings($95.36 million) from the market.
The local currency is down 5.8 percent against the dollar so far this year and some traders say it could weaken past the key support level of 2,700 in the next few days on the back of importer demand.
Isaac Iga, chief dealer at Orient Bank, said he expected the shilling to maintain a bearish outlook, though the market is likely to see some money flowing in at month's end that should limit the pressure on the shilling.
Some of that will come from non-governmental organisations (NGOs), which typically convert hard currency at the end of the month to pay salaries and meet other operational expenses, he said.
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