KAMPALA: The Ugandan shilling was weaker on Thursday due to negative sentiment in the local currency after a rise in US interest rates, traders said.
At 0929 GMT commercial banks quoted the local currency at 3,420/3,430, weaker than Wednesday's close of 3,400/3,410.
"After the Fed rate move, naturally the sentiment toward the shilling had to take a hit," said Shahzad Kamaluddin, a trader at Crane Bank.
But Kamaluddin said the shilling's performance after the US rate rise appeared to be a knee-jerk reaction and the cyrrency was likely to stabilise around 3,400, with demand tailing off ahead of Christmas.
"There might be some (dollar) appetite, but players are not keen on taking on large positions considering holidays are around the corner," he said.
The local currency has dropped 18.8 percent against the dollar since the end of last year.
Market players say the shilling could also get support from the central bank's move to hold its lending rate at 17 percent this week, saying its tightening cycle has already started to bear down on inflation pressures.
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