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Uganda Vows `More Aggressive’ Support for Currency, Central Bank Says

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Posted January 19, 2011 by Ugandan Diaspora News Team in Business ~ 1,534 views

     


By Fred Ojambo | Uganda’s central bank said the shilling is “undervalued” versus the dollar and that it plans to “adopt a more aggressive stance” to support the local currency.

The shilling has declined more than 19 percent against the dollar since the beginning of last year. The East African nation’s currency traded at 2,355 to the dollar at 5 p.m. in Kampala, the capital, from 2,390 late yesterday.

“Further depreciation will be counterproductive for macroeconomic management, especially because of the impact this will have on the price of imported goods and hence on consumer price inflation,” Emmanuel Tumusiime-Mutebile, governor of the Kampala-based bank, said today in an e-mailed statement. “For the immediate future, curbing such depreciation will be a priority of the Bank of Uganda’s macroeconomic management.”

The inflation rate rose to an annual 3.1 percent in December, from 1.4 percent the month before, as the prices of some food items increased, Uganda’s statistics agency said on Dec. 31.

“We sold dollars yesterday to the interbank market,” Tumusiime-Mutebile said. “We are prepared to intervene again if necessary. We are complementing this by raising interest rates in the interbank market and on the repo instruments.”

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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Ugandan Diaspora News Team

Ugandan Diaspora News Online is an independent, non political news portal primarily aimed at serving Ugandans who work and reside outside Uganda. Our aim is to be a one stop shop for everything Ugandan and the celebration of our Ugandan heritage.

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