Oct. 14 (Bloomberg) -- Uganda’s shilling climbed to a three-week high against the dollar, extending its gain this week as Kenya, its biggest trading partner, imposed limits on banks’ foreign-currency operations to bolster its currency.
The currency of East Africa’s third-biggest economy appreciated as much as 1 percent to 2,820, the strongest level since Sept. 22, and traded 0.4 percent up at 2,836 by 1:16 p.m. in the capital, Kampala, taking its advance this month to 1 percent. The currency has lost 19 percent this year.
The foreign-exchange exposure limit for commercial banks was lowered to 10 percent of core capital from 20 percent, Finance Minister Uhuru Kenyatta said yesterday. The announcement is part of a set of measures to boost the Kenya’s currency, which has lost 20 percent this year and is the world’s worst performer.
“The Ugandan shilling is following that of Kenya,” Denis Mashanyu, a currency trader at Standard Chartered Bank Uganda Ltd., said by phone from Nairobi, the Kenyan capital. “There is correlation with the stance taken by Central Bank of Kenya’s restriction in offshore participation and cutting down on positions that can be run by banks.”
Uganda’s shilling reached 2,897.50 on Sept. 23, the weakest since June 1993. A surge in food and fuel prices pushed inflation to a more than 18-year high of 28.3 percent this month from 21.4 percent in August, the Uganda Bureau of Statistics said today.
--Editors: Ana Monteiro, Gavin Serkin
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