Shilling expected to stay strong against US dollar
Posted Friday, December 6 2013 at 02:00
Kampala- Low demand coupled with reduced inflows from the offshore investors has helped Uganda’s foreign exchange market to stay stable with the shilling making a slight appreciation against the US dollar.
By yesterday, the shilling was trading in the range of 2525 to 2530 against US Dollar with the demand and supply matching.
Market Outlook by Centenary Bank indicates that shilling is expected to remain firm in the short-term on the back of end-month dollar conversions.
The stable currency environment is good for importers and exporters, given that they are in a better position to predict their operational costs.
However, a strong Shilling means importers will spend less to import goods while exporters will earn less from their exports.
The head of Market Making at Barclays Bank Uganda, Mr Faisal Bukenya told the Daily Monitor that they have recently witnessed a high degree of stability with in the foreign exchange market.
“The current situation in the foreign exchange market reflects stability, which we expect it to continue up to next week, because the level of demand and supply for the US dollars into the market is matching,” he said.
For the first time in Uganda’s debt history, the Bank of Uganda issued a 15 treasury bond as government looks for funds to finance the 2013/14 national budget using securities, which it sales to investors in the local market.
The Wednesday action by the Bank of Uganda was spilt into two with Shs60 billion going into the 15 Treasury bond and another Shs80 billion going into a three-year treasury bond.
The results of the 3 & 15-year T-bond auction done by the Bank of Uganda on 4th December 2013 indicated that the yields were in the ranges of 13.950-14.15 per cent and 14.880-15.4 per cent in the 3 & 15-year bonds respectively.
Mr Bukenya said that the 15-year Treasury bond did not receive an aggressive interest from the offshore investors.
Traders said they expected good inflows from investors abroad buying local government securities due to their fairly attractive yields, amid tightness in the local money market.