July 8 (Bloomberg) -- Uganda’s shilling had its biggest weekly drop in two years against the dollar as importers increased demand for the U.S. currency to buy oil products to fire generators amid an electricity shortage in the East African nation.
The currency of the continent’s second-biggest coffee producer depreciated 1 percent to 2,610 per dollar by 5 p.m. in Kampala, the capital, taking its decline this week to 3.2 percent, the biggest five-day decrease since the week through July 10, 2009.
“We really have demand from the energy sector as guys want to come out with measures amid the power blackout,” Ahmed Kalule, a currency trader at Bank of Africa Uganda Ltd., said in a phone interview. “There is high corporate demand, but retail customers are not willing to buy.”
Independent generators who sell power to the state-run Uganda Electricity Transmission Co. cut supplies to the national grid on July 4 because they are owed money by the government, Eriasi Kiyimba, the agency’s chief executive, said on July 5. Uganda, which is reliant on thermal generators for about 47 percent of its electricity, has an energy shortfall of as much as 120 megawatts during periods of peak demand, he said.
Uganda’s currency has weakened 12 percent against the dollar so far this year as inflation surged to a 17-year high. The shilling is the world’s third-worst performing currency, after Suriname’s dollar and the Maldives rufiyaa, according to Bloomberg data.
--Editors: Paul Richardson, Ana Monteiro.
To contact the reporter on this story: Fred Ojambo in Kampala via Nairobi at firstname.lastname@example.org.
To contact the editor responsible for this story: Paul Richardson at email@example.com.