Ugandan shilling falls, hit by dollar demand from telecom firms

KAMPALA Fri May 16, 2014 8:11am EDT

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KAMPALA May 16 (Reuters) - The Ugandan shilling weakened on Friday, pressured by demand for dollars from telecom companies and negative market sentiment stoked by falling government debt yield rates.

At 0913 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,535/2,545, down from Thursday's close of 2,530/2,540.

"There has been a lot of (dollar) demand mainly coming in from telecom sector players," said Shahzad Kamaluddin, trader at Crane Bank.

Bulk demand for hard currency in Uganda mostly comes from importers in the energy, manufacturing and telecom sectors and when appetite from these players is high, the shilling often weakens.

"However the overall market sentiment toward the shilling is also negative because of dropping yields on government debt," Kamaluddin added.

Rates on the 182 and 364-day Treasury bills declined further at an auction this week although the yield on the benchmark 91-day papers rose slightly. At the previous sale rates on all the three papers declined.

Market players say the falling yields could depress foreign appetite for Ugandan debt, potentially slowing hard currency inflows.

Kamaluddin said the shilling was also likely tracking the weakening of the Kenyan shilling against the greenback.

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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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Central Bank ................

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($1 = 2530.0000 Ugandan shillings) (Editing by Pravin Char)

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