Ugandan shilling stable, excess liquidity mop ups help

KAMPALA Tue Jan 7, 2014 6:26am EST

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KAMPALA Jan 7 (Reuters) - The Ugandan shilling was stable for the fourth straight session on Tuesday, underpinned by the central bank mopping up excess liquidity, although the local currency was seen bearish in the days ahead, traders said .

At 0919 GMT commercial banks quoted the currency of Africa's largest coffee exporter at 2,521/2,526, barely changed from Monday's close of 2,522/2,527.

The central Bank of Uganda mopped up 39.5 billion shillings ($15.67 million) on Tuesday via a repo in addition 201 billion shillings the bank had taken out on Monday.

"Repos by the central bank are keeping the shilling largely stable," said Shahzad Kamaluddin, trader at Crane Bank.

"However we think some weakening will come in when business activity is back to normal and importer (dollar) demand returns."

Traders say the shilling's outlook is fragile, undermined by the ongoing fighting in neighbouring South Sudan which has cut off one of Uganda's most lucrative export markets and depressed hard currency inflows.

This month's BoU policy rate decision, though, is seen cushioning any undue pressure on the local currency.

BoU left its benchmark Central Bank Rate unchanged at 11.5 percent for January from December, saying it needed to balance current low prices with risks of upward inflationary pressures in the coming months.

A market note from KCB Uganda forecast the shilling would oscillate between 2,515/2,530 in the days ahead.

UGX Spot Rate.....

Ugandan Shilling Money Guide....

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Uganda Equities Guide.......

Uganda All Share Index........

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Ugandan Debt Guide............

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Ugandan Contributor Index....

Uganda Coffee Prices....... ($1 = 2,520 Ugandan shillings) (Editing by James Macharia and Alison Williams)

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