Bloomberg News

Uganda Shilling Heads for Record Low on Company Dollar Demand

October 11, 2011

Oct. 11 (Bloomberg) -- Uganda’s shilling headed for the weakest closing level in 18 years as manufacturers bought dollars to import raw materials.

The currency of East Africa’s third-biggest economy depreciated 0.9 percent, the most in a week, to 2,890 at 1:05 p.m. in the capital, Kampala. A close at this level would be the weakest since at least June 1993, according to data compiled by Bloomberg.

“We are seeing dollar demand in the interbank market,” Faisal Bukenya, the head of currency trading at Barclays Bank Uganda Ltd., said by phone from Kampala. “The banks are trying to fulfill underlying demand and we have seen the manufacturing sector aggressively buying the dollar.”

The currency of Africa’s second-biggest coffee exporter has slipped 20 percent this year to the dollar, making it the second-worst performer after Kenya’s shilling, which has dropped 23 percent. A surge in food and fuel prices pushed inflation to a more than 18-year high of 28.3 percent in September from 22 percent in August, the Uganda Bureau of Statistics said on Sept. 30.

--Editors: Ana Monteiro, Hilton Shone

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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