Bloomberg News

Uganda Shilling Dips Lowest in a Month on Company Dollar Demand

August 01, 2011

Aug. 1 (Bloomberg) -- Uganda’s shilling fell to the lowest in more than a month against the dollar as companies bought the U.S. currency to finance their operations against reduced inflows of the greenback.

The currency of Africa’s second-biggest coffee producer depreciated 1.1 percent to 2,651.25 per dollar, the weakest intraday level since June 30, and traded 0.9 percent down at 2,646 by 11.32 a.m. in the capital, Kampala.

“It is the beginning of the month and corporate buyers are in the market to finance their strategies,” Ahmed Kalule, a currency trader at Bank of Africa Uganda Ltd., said by phone from Kampala. “The shilling shouldn’t have touched these levels if we had good inflows.”

The shilling, which reached the weakest level since at least 1993 on June 30, has depreciated 4.5 percent against the dollar in the last month, making it the world’s worst performer in the period. A surge in food and fuel prices pushed inflation to a more than 18-year high of 18.7 percent in July from 15.7 percent in June, the central bank said on July 29.

--Editors: Ana Monteiro, James Kraus

-0- Aug/01/2011 08:55 GMT

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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