Ugandan shilling steady, helped by subdued dollar demand

Uganda’s shilling was broadly stable on Tuesday, helped by tight liquidity and subdued appetite for the U.S. dollar.

At 0939 GMT, commercial banks quoted the shilling at 3,375/3,385, unchanged from Monday’s close.

“There are pockets of shilling tightness in the interbank (market),” said Ali Abbas, trader at Crane Bank, adding that regular end-month corporate demand for dollars could start putting pressure on the local currency in the coming days.

Companies such as manufacturers usually seek dollars towards the end of the month to pay for orders.

Last week’s decision by the International Monetary Fund to cut Uganda’s 2015/16 growth forecast to 5 percent, down from a previous 5.8 percent, and Moody’s downgrade of its credit rating outlook to negative from stable would also weigh, traders said.

This year, the shilling has lost 18 percent of its value against the dollar.

As the year ends, some foreign-owned companies are also likely to buy dollars as they prepare to report results for the year, a trader said.

“For the remaining weeks of this year, I expect a weaker shilling although depreciation will be slow,” he said.