Thursday May 1 2014

Less demand for the Dollar keeps Shilling strong

By Dorothy Nakaweesi

Kampala- Less demand for the dollar has kept the Uganda Shilling strong; a situation experts say is good for the economy which is largely dependent on imports.

According to the Bank of Uganda’s daily report, by close of yesterday, the shilling was trading in the ranges of 2,514/2,524 against the 2,517/27 it traded on early this week.

Explaining this performance, Standard Chartered Bank’s Head of Financial Markets James Mutuku said: “The strengthening of the shilling from 2,570 to the current levels of 2,520 is an indication that it will remain in the 2,500-2,550 range in the medium term”.

Adding that the 2,500 region presents a very strong support and it’s highly unlikely that the current environment will strengthen beyond that level.

Experts say that what this current stance means is that Uganda will continue having a stable exchange rate regime in the medium term.

However some experts say that this trend may not last for long as the Shilling will lose ground when foreign investors start paying off dividends in the coming month of May.
“This performance is short-lived, we expect the Shilling to lose ground as foreign investors off-set the dividends,” added Mr Faizal Bukenya, the Barclays Bank head of money making.
The Shilling has registered historical performance since the beginning of the year, according to information from Exchange rate –a UK rates website. The highest the local currency has traded against the dollar was at 2565/75 a month ago. On average, it has traded at 2511/22 with its lowest trading so far recorded at 2452/62 in February.