Shilling strengthens beyond initial forecasts
Posted Thursday, January 23 2014 at 02:00
The strength has been attributed to increase in coffee exports.
Kampala- The Uganda Shilling has gained some ground against the dollar since the beginning of the year -a stance experts say has gone beyond their prediction.
Yesterday, data from Bank of Uganda (BoU) showed the Shilling was trading between 2481/2491 by opening of business, a stronger standing than what was experienced at the beginning of the year when it traded at 2520/2530.
Experts attribute the strength to the increase in exports from the country especially coffee - the country’s leading export commodity.
Talking to the Daily Monitor, BoU director of research Adam Mugume said: “The Shilling has appreciated beyond our projection, partly helped by stronger receipts from coffee exports.”
The period between December and March is the peak for the coffee season in Uganda. This means most of Uganda’s coffee is exported during this time.
“At the peak of the season which is December to March, the numbers of bags usually rise for example from 300,000 to 350,000 compared to the 200,000 to 250,000 bags of coffee exported during April to November,” Mr Mugume added.
Each bag is about 60kgs and currently the price per kilo is about $1.7 (about Shs4,221), down from about $2 (about Shs5,000) a year ago. The increase in coffee exports, though seasonal therefore gives slightly higher exports receipts.
Barclays Bank’s Head of Money Making Faisal Bukenya attributes the Shilling’s performance to lack of demand for the dollar. “There are few people demanding for the dollar and this has seen the Shilling strengthen,” Mr Bukenya said.