Ugandan shilling stable, central bank seen holding rate

Mon Jun 2, 2014 6:21am EDT

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KAMPALA, June 2 (Reuters) - The Ugandan shilling was
unchanged for a second trading session on Monday as market
players forecast the central bank would hold its key lending
rate for June steady despite a significant drop in inflation
last month.
    At 0928 GMT commercial banks quoted the shilling at
2,550/2,560, unchanged from Friday's close.
    "The current economic variables present a case of mixed
balance of risks surrounding the inflation, exchange rate that
has lately been depreciating, and the  growth outlook," said
Stephen Kaboyo, managing director at Alpha Capital Partners.  
    "In my view there is little reason to think that BOU (Bank
of Uganda) will change policy at this stage ahead of the budget
statement for 2014/2015."
    Uganda's year-on-year headline inflation declined to 5.4
percent in May from April's 6.7 percent, undermined by a slow
rise in food prices.
    Bank of Uganda is due to set its benchmark Central Bank Rate
for this month on June 4. The bank has held its rate at 11.5
percent for the last five straight months.
    That neutral policy stance has partly helped stabilise the
shilling which is only 1.2 percent down against the greenback in
the year to date. 
    "The right thing for the central bank would be to hold the
rate cautiously ... inflationary risks could bubble up down the
path," said Benon Okwenje, trader at Stanbic Bank.
      
   UGX Spot Rate..... 
   Ugandan Shilling Money Guide.... 
   Calculated Cross Rates.......... 
   Deposits..................... 
   Deposits & Forwards............. 
   Uganda Equities Guide....... 
   Uganda All Share Index........ 
   Shilling background ..... 
   Ugandan Debt Guide............ 
   All Uganda Bonds............. 
   Uganda T-Bills.............. 
   Uganda Benchmark............. 
   Central Bank ................ 
   Ugandan Contributor Index.... 
   Uganda Coffee Prices....... 

 (Reporting by Elias Biryabarema; Editing by George Obulutsa and
Toby Chopra)
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