Uganda shilling rangebound versus the dollar

The Ugandan shilling recouped early losses on Wednesday to trade rangebound against the dollar with interbank demand for the dollar pressing the local currency.

At 0800 GMT commercial banks quoted the local currency at 2,320/2,325 against Tuesday’s close of 2,323/2,328. Earlier it had weakened to 2,332/2,337.

“The rise in inflows that we saw toward the end of year has more or less dried up while (dollar) demand is still high and this will certainly keep the shilling on the lower side,” said Faisal Bukenya, head of market making at Barclays Bank Uganda.

Standard Chartered Bank Uganda said in a report the market had been “caught short of dollars into the New Year, with corporate activity resuming, and a conclusion of end of year tax obligations.”

Traders expect the shilling to change hands in the range of 2,315-2,340 in the coming days.

“We expect the unit to depreciate further on the back of local demand coupled with subdued inflows,” said Stanbic Bank Uganda in a market report.