Central Bank intervenes to save troubled Shilling, again

Kampala.

Bank of Uganda (BoU) has intervened in the market to save the Shilling from surpassing another record low this year. The Uganda Shilling had inched closer to a high Shs3700 yesterday afternoon before the Central Bank intervening.

In an email response to the Daily Monitor, Ms Christine Alupo, the director communications at BoU, said “…this is to confirm that the Bank today intervened on the sale side in the foreign exchange market to stem volatility.” She, however, did not specify the amount pumped into the market.

This BoU intervention means they sold dollars – from the reserves - at a time they’re scarce. The intervention usually brings down the rate. This intervention is the most significant since the first week of July 2015 when the dollar rate was nearly at Shs3,700.

Mr Stephen Kaboyo, the Alpha Capital managing partner, told Daily Monitor that the injection could have been substantial considering an artificial movement of the Shilling to Shs3,450 against the dollar by close of yesterday.

“I can’t tell how much the central bank has injected but it should be a large figure because the stretch of gain is quit huge,” he said.

The unit, according to Bank of Uganda had opened yesterday at Shs3,664.78 before gaining by more than Shs200 to sell at Shs3,430/3,440 midday.

Early this month, BoU warned that inflation could spiral on the basis of continued weakening of the Shilling against major currencies.

Welcome!

You're all set to enjoy unlimited Prime content.