The Uganda Shilling has continued to exhibit its strength as dollar demand in the market remains relatively sluggish.
By close of business yesterday, the shilling was trading at 2,462/2,472 against the US dollar, slightly stronger than it traded at the close of last week when it traded at 2,465/2,475.
Speaking to the Daily Monitor, Standard Chartered Bank’s manager corporate affairs Herbert Zake said: “Looking ahead, we expect the Uganda Shilling to trade in recent ranges with support seen from continued lack of demand for the dollar.”
Experts say the shilling’s strength is not a good sign for a country which is promoting her export industry and if the situation continues in favour of the local unit, the annual export value will definitely drop.
According to Bank of Uganda, the country’s exports decreased to $217.01m (about Shs533.8b) in December of 2013 down from $226.76m (about Shs557.8b)in November of 2013. Uganda exports mostly agricultural products (80 percent of total exports) and coffee, tea, flowers, fish and tobacco are some of the leading export commodities.
On the other side, importers are now able to purchase more products.
The Central Bank statistics show the country’s imports increased to $513.80m (about Shs1.26 trillion) in December of 2013 down from $500.30m (about Shs1.23 trillion) in November of 2013. Uganda mostly imports oil, which takes a 24 percent share of the total imports, followed by pharmaceutical products and capital goods.
“This trend in the shilling strength is good for the economy since Uganda is an importing country,” Barclays Bank Head of Money making Faisal Bukenya, said. He also predicts the local unit will continue to strengthen because Uganda has not restricted offshore investors coming into the country.