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Ugandan Shilling Heads for Weakest in 18 Years on Importers’ Dollar Demand

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Posted August 16, 2011 by Ugandan Diaspora News Team in Economy ~ 2,027 views

     

By Fred Ojambo ~ Uganda’s shilling, the world’s worst-performing currency in the last month, headed for the weakest closing level on record because of increased demand for dollars by companies to pay for raw-material imports.

The currency of Africa’s second-biggest coffee producer depreciated as much as 1.3 percent to 2,800 per dollar and traded 0.9 percent down at 2,790 by 1:17 p.m. in the capital, Kampala, according to data compiled by Bloomberg. A close at this level would be the weakest since at least June 1993.

“We are seeing the shilling depreciating because of demand for the dollar by manufacturers,” Faisal Bukenya, the head of currency trading at Barclays Bank of Uganda Ltd., said by phone from Kampala. Dollar sales by the central bank on Aug. 12 didn’t strengthen the shilling because “there is still low donor inflows into the country,” he said.

The currency of East Africa’s third-biggest economy has depreciated 8.6 percent over the last month, and weakened 17 percent since the beginning of the year, making it the world’s worst-performing currency against the dollar over both periods, according to data compiled by Bloomberg.

A surge in food and fuel prices pushed inflation to a more than 18-year high of 18.7 percent in July from 15.7 percent in June.

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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