Ugandan shilling firms on tighter liquidity, S&P credit rating

KAMPALA, July 22 Tue Jul 22, 2014 8:39am EDT

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KAMPALA, July 22 (Reuters) - The Ugandan shilling strengthened on Tuesday, buoyed by a central bank tightening of liquidity and Standard and Poor's affirming Uganda's sovereign credit rating.

At 1104 GMT commercial banks quoted the shilling at 2,625/2,635, stronger than Monday's close of 2,635/2,645.

"The market was already short on shillings and then the central bank made liquidity tighter with a repo," said Shahzad Kamaluddin, trader at Crane Bank.

Kamaluddin said Bank of Uganda mopped up 170.5 billion shillings ($65 million) via a seven-day repo.

S&P on Monday affirmed Uganda's B credit rating - which classes its debt as speculative - with a stable outlook, citing high GDP growth rates, political stability and infrastructure investments.

"The rating that came in, especially the stable outlook, is also backing a positive sentiment for the shilling," Kamaluddin added.

The shilling is now down 4 percent in the year to date and analysts say its short-term outlook may also benefit from a likely uptick in offshore appetite for Ugandan debt.

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Uganda Coffee Prices....... ($1 = 2632.0000 Ugandan shillings) (Reporting by Elias Biryabarema; editing by Drazen Jorgic/Ruth Pitchford)

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