KAMPALA: Uganda's shilling hit its weakest level in more than three years on Thursday, under pressure from commercial banks seeking dollars as the central bank signalled further interventions to defend the currency.
The shilling has slipped steadily since the start of the year, hitting levels last seen in October 2011 as the dollar has strengthened on global markets and local demand for foreign currency has picked up after a holiday season lull.
By 0817 GMT, the shilling was trading at 2,840/50, falling back to the same level at which bankers said the central bank intervened with dollar sales earlier in the session.
The Bank of Uganda (BoU) said in a statement it would "take measures to tame the depreciation arising from the speculative tendencies".
Traders said the bank had so far not sold enough dollars to drive the shilling off its lows.
"There's a feeling in the market that the amount of dollars sold by BoU wasn't significant," said Ahmed Kalule, trader at Bank of Africa.
"The market is also still heavy on (dollar) demand from banks covering short positions plus some of the corporates who are preparing for dividend payments."
Faisal Bukenya, head of market making at Barclays Bank, said the central bank had intervened when the shilling hit roughly 2,840/2,850 to the dollar, initially helping it to recover to Wednesday's closing level of 2,830/40.
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