Bloomberg News

Ugandan Shilling Gains First Day in 3 on Local Currency Shortage

September 29, 2011

Sept. 29 (Bloomberg) -- Uganda’s shilling climbed for the first time in three days against the dollar as companies stayed out of the market because of a shortage of shillings.

The currency of East Africa’s third-biggest economy gained as much as 0.5 percent to 2,841.2 per dollar and traded up 0.2 percent at 2,850.50 by 3:13 p.m. in the capital, Kampala, according to data compiled by Bloomberg.

“There was little demand of the dollar today as people don’t have liquidity,” Abbey Mutabali, a currency trader at Centenary Bank Ltd., said by phone from Kampala. “Banks are tight and some have been selling dollars to get the shilling.”

Uganda’s shilling reached 2,897.50 against the dollar on Sept. 23, the weakest since June 1993, as inflation increased and on concern Europe’s debt crisis will weaken riskier assets further. The currency slipped 19 percent this year to the dollar, making it the second-worst performer after Kenya’s shilling.

A surge in food and fuel prices pushed inflation to an 18- year high of 21.4 percent in August from 18.8 percent in July, the Uganda Bureau of Statistics said on Aug. 31.

--Editors: Ana Monteiro, Peter Branton

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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