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Uganda Shilling Falls for 3rd Day as Strike by Kampala Traders Continues

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Posted July 7, 2011 by Ugandan Diaspora News Team in Economy ~ 1,967 views

     

By Fred Ojambo ~ Uganda’s shilling fell for a third consecutive trading day amid a strike by retail traders in the capital, Kampala, over the impact that accelerating inflation and the weakening currency are having on their businesses.

The currency of Africa’s second-biggest coffee producer depreciated 0.9 percent to 2,595 per dollar at 5:19 p.m. in Kampala, bringing its loss to 11 percent so far this year. The currency closed at 2,572.50 yesterday.

“There was limited trading because of the strike,” Taib Lubega, a dealer at Stanbic Bank Uganda Ltd. in Kampala, said in a phone interview. The shilling is expected to come under renewed pressure tomorrow because of piled up demand for dollars,” he said.

Inflation in the East African country slowed to 15.8 percent in June after reaching a 17-year high of 16 percent in May, while the shilling slumped to an 18-year low last month. The work stoppage, which began yesterday, continued today after the government failed to meet demands to address the weakening shilling, Kampala City Traders Association spokesman Issa Sekitto said in an interview today.

The strike brought business in the city to a standstill yesterday, the Daily Monitor, a Kampala-based newspaper, reported.

The Ugandan government is doing “everything possible” to curb inflation, while the Bank of Uganda is continuing to “cautiously intervene” in domestic money markets to ensure the exchange rate doesn’t spiral out of control, Information Minister Mary Karooro Okurut said in an e-mailed statement.

“The bank will continue to support stability in the exchange rate other than supporting a specific exchange rate,” Okurut said in a phone interview.

Uganda, East Africa’s third-biggest economy, is scheduled to become an oil producer next year when Tullow Oil Plc (TLW) is expected to start pumping crude and gas from the Lake Albert Basin. The country has an estimated 2.5 billion barrels of oil, with about 1 billion barrels in proven reserves, according to Tullow.

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