Bloomberg News

Uganda Shilling Slips for First Day in Three on Dollar Demand

October 20, 2011

Oct. 20 (Bloomberg) -- Uganda’s shilling weakened for the first time in three days against the dollar.

The currency of East Africa’s third-biggest economy depreciated 0.2 percent to 2,840 per dollar at 3:59 p.m. in Kampala, the capital according to data compiled by Bloomberg. It closed at 2,835 yesterday.

“The market was driven by interbank buying of the dollar; otherwise there is no appetite for the dollar from customers because of shortage of shillings,” Taiub Lubega, a currency trader at Stanbic Bank Uganda Ltd., said by phone from Kampala today. The “lack of shillings is caused by tight monetary policy by the central bank.”

Uganda’s central bank will take “appropriate” steps to support the shilling, though it hasn’t decided on whether to follow neighboring Kenya in limiting the foreign exchange exposure of commercial banks, spokesman Elliot Mwebya said yesterday. The shilling reached 2,897.50 against the dollar on Sept. 23, the weakest since June 1993, as inflation increased and as Europe’s debt crisis cut demand for riskier assets.

The currency has slipped almost 19 percent this year to the dollar, making it the second-worst performer in the period after the Kenyan shilling, which has fallen 19 percent.

--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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