Bloomberg News

Uganda Shilling Slips to Lowest in Week on Strong Dollar Demand

November 25, 2011

Nov. 24 (Bloomberg) -- Uganda’s shilling slumped for the third day against the dollar, reaching the lowest level in a week, on increased demand for the greenback by oil importers.

The currency of East Africa’s third-biggest economy depreciated as much as 1.4 percent to 2,605 per dollar and was trading 0.9 percent down at 2,593 by 12:56 p.m. in Kampala.

“The Ugandan shilling weakened as oil importers sought the dollar to import supplies,” Ahmed Kalule, the head of currency trading at Bank of Africa Uganda Ltd., said by phone.

Kenya’s shilling, the world’s best-performing currency against the dollar this month, advanced as measures taken by the central bank this month continued to curb money supply.

The currency of East Africa’s biggest economy appreciated 0.1 percent to 90.22 per dollar at 1:01 p.m. in Nairobi.

Kenya’s monetary policy committee increased the key lending rate by 5.5 percentage points to a record 16.5 percent on Nov. 1 as it battles to contain inflation spurred by the worst regional drought in 60 years and higher fuel prices. Inflation accelerated to 18.9 percent in October from 17.3 percent in the previous month, the government said Oct. 28.

“Recent aggressive central-bank intervention has managed to stabilize the fortunes the Kenyan shilling,” FM Capital Partners analysts wrote in a note to clients.

The Tanzanian shilling appreciated 0.2 percent to 1,704 per dollar as businesses sought the local unit to pay for their monthly obligations.

“The shilling has strengthened as businesses offload there dollars in favor of the shilling to make monthly payments like salaries and tax,” Eric Chijoriga, a trader with National Bank of Commerce, Absa Group Ltd.’s Tanzanian unit, said by phone from Dar es Salaam.

--With assistance from Fred Ojambo in Kampala and David Malingha Doya in Dar es Salaam. Editors: Ana Monteiro, Tim Farrand

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net

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


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