11 July 2014

Uganda: Shilling Continues to Depreciate

The Uganda Shilling depreciated further in the week's trading despite the Central Bank intervening twice in the week, selling US Dollars in an effort to halt the slide.

James Mutuku, the head of financial markets said on July 11 that the interbank market quoted the pair 2665/75 on Friday in the early morning session compared to the previous close of 2635/45.

The move was attributed to a surge in corporate demand plus unattractive yields on Ugandan assets. Interest rates remained largely unchanged with some tightness in the short end as the money market cycle came to an end, Mutuku added.

"Next week we expect the Uganda Shilling to remain on the back foot, trading in the 2640-85 range," he said, adding the the Central Bank is offering 2 and 5 year bonds in the market and strong investor appetite is expected especially from fund managers, and yields should mostly remain firm.

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