7 December 2012

Uganda: Shilling Continues to Weaken, Says Expert

Denis Mashanyu, the forex trader at Standard Chartered Bank says the Uganda shilling weakened against the US dollar during the week that ended Dec. 7 closing 2690/00 from the previous close of 2675/85.

Mashanyu said the move came after the central bank cut the central bank rate by 50 basis points to 12% from 12.5%.

"Next week we expect the market to remain largely stable with a bias towards further local unit depreciating," he said, adding we expect the shilling to trade in the range of 2680-2710 though with thin liquidity as major players slow down ahead of the festive season.

The monetary policy statement read by central bank Governor on Dec4, Emmanuel Tumusiime Mutebile said economic growth is expected to slow due to aid cuts by donors thus justifying further easing despite the inflation figure having moved up to 4.9% in November from 4.5% in October. Bank of Uganda expects core inflation to settle at around 50% in 2013.

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