Ugandan shilling steady, seen stronger on liquidity mop-up

KAMPALA Mon Feb 10, 2014 5:29am EST

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KAMPALA Feb 10 (Reuters) - The Ugandan shilling was little changed on Monday but was seen gaining strength, helped by the central bank draining liquidity from the market and weak demand for hard currency.

At 0852 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,464/2,469, little changed from Friday's close of 2,465/2,470.

Sage Daniel Muganza, a trader at Centenary Bank, said the central Bank of Uganda had mopped up a total of 466 billion shillings ($189 million) from the market on Monday via a seven-day repo.

"The liquidity mop up is expected to support the shilling's strengthening bias," said Muganza. "We may see significant gains in the course of the weekand if the firming trend holds it's possible the shilling will touch 2,450 levels this week."

The shilling has maintained a strengthening momentum so far this year, gaining 2.3 percent against the dollar, helped by weak appetite for the greenback and healthy inflows from offshore traders buying government debt.

Faisal Bukenya, head of market-making at Barclays Bank, forecast the shilling would keep posting gains in the medium term as long as demand for dollars remained subdued.

The Bank of Uganda's decision to leave its policy rate unchanged this month is also seen supporting the shilling's bullish bias. The bank left its benchmark Central Bank Rate (CBR) at 11.5 percent for February from last month.

UGX Spot Rate.....

Ugandan Shilling Money Guide....

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Uganda Equities Guide.......

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

Shilling background .....

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

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Ugandan Contributor Index....

Uganda Coffee Prices...... ($1 = 2467.0000 Ugandan shillings) (Reporting by Elias Biryabarema; editing by Drazen Jorgic)

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