Ugandan shilling stronger on hopes of higher inflows

The Ugandan shilling strengthened on Tuesday on expectations of a good supply of dollars from citizens abroad returning for the holidays, commodity exporters and non-governmental organisations (NGOs).

At 0903 GMT, commercial banks quoted the shilling at 3,335/3,345, slightly up Monday’s close of 3,345/3,355.

“We expect a lot of flows from remittances, NGOs and exporters of commodities like coffee and fish,” said David Bagambe, trader at Diamond Trust Bank.

NGOs receive their donations mostly in hard currency. They will need shillings to pay suppliers and other operating expenses before the close of the year, he said.

The shilling has been trading at 3,300 to 3,500 to the dollar in recent weeks after depreciating for months, prompted the central bank to intervene several times.

Traders are also watching out for a central bank interest rate decision due around mid-month. Some say rates might rise further to contain inflation pressures.

Year-on-year headline inflation rose to 9.1 percent last month from 8.8 percent in October.