Investor appetite for government securities uplifts Shilling
Posted Friday, October 18 2013 at 01:00
Surge. Offshore investors have been investing government securities especially after the Shs140 billion Treasury Bill auction.
The Uganda Shilling has appreciated against the US dollar thanks to investors who cashed in on the Shs140 billion treasury bills.
The Wednesday auctioning of Shs140 billion treasury bills in the market was oversubscribed by a larger margin coupled with low demand for the US dollar, helping the Uganda Shilling to appreciate against the US dollar. By yesterday, the Shilling traded at Shs2,511 per US dollar buying and Shs2,520 per US dollar selling, the highest appreciation the local unit has recorded against the dollar.
The executive director operations at Bank of Uganda, Mr Philip Andrew Wabulya, told Daily Monitor yesterday that there is high demand for both short and long term government securities locally and internationally. “The Shs140 billion Treasury Bills were oversubscribed by a wider margin,” Mr Wabulya said, adding: “We now use the, securities calendar and Central Depositary system which allow banks to bid for the securities online.”
The online biding system became operational in September 2013,” he said. Head of Market Making at Barclays Bank Uganda Faisal Bukenya told the Daily Monitor yesterday that the auction attracted dollar inflows into Uganda through the offshore investors who are actively investing government securities.
Mr Bukenya explained that the appreciation of the Shilling is being supported by low demand for the US dollar locally. “Addition to lack of demand for US dollars locally, globally the US dollar has been under pressure following fiscal policy differences in the United States government that led to partial shutdown in Federal government,” Mr Bukenya explained.
The managing director of Alpha Capital, Mr Stephen Kaboyo, yesterday said: “The primary factor driving the appreciation is the improved supply levels against subdued demand. Strong inflows mainly from exports and portfolio flows have supported the shilling. Other factors that have played in favour of the Shilling is the US government standoff on the debt ceiling that has kept the dollar under pressure,” he said.