Shilling gains at week end

A stable currency is what every business would want because it helps in planning.

Kampala

There may be a slight sigh of relief for Ugandans as experts predict that the local unit will remain steady against the dollar in the coming days.

The continued local currency stability is an indicator that businesses will this time have the laxity of predictable planning as well as prudent management of inflationary pressures that have gone haywire, hurting the economy.

By close of business this week, the local unit was trading in the regions of Shs2640/2655. Standard Chartered Bank head of financial markets, Mr James Mutuku, said: “The stability of the Shilling has topped the Central Bank’s agenda since the third quarter of 2011. We can state that Bank of Uganda has won the “inflation war.”

He said the perceived lack of demand in the economy due to the relatively high cost of credit has stifled credit expansion and limited the demand side of the currency. So, a small portion of the stability can be attributed to lack of demand.

BoU Director Research, Dr Adam Mugume, attributed the Shilling’s stability to forex inflows amidst low demand for the foreign exchange. “Demand for foreign exchange is also usually low in January to February as this is the period the corporates pay their annual corporate taxes,” he added.

dnakaweesi@ug.nationmedia.com