Remittances, NGOs help Uganda Shilling firm vs US Dollar

Posted December 6, 2011 by Ugandan Diaspora News Team in Business ~ 3,612 views


By Elias Biryabarema, KAMPALA (Reuters) – The Uganda shilling firmed against the dollar for the second straight session on Tuesday, as greenback inflows from charities, offshore investors and Ugandans living overseas comfortably outweighed diminishing importer dollar demand.

Traders forecast the local currency would extend its gains further in the days ahead, with an expected surge in remittances from Ugandans in the Diaspora ahead of the festive season.

At 1030 GMT, the shilling was up 0.2 percent for the day, Thomson Reuters data showed, trading at 2,485/2,489.

“We have inflows from offshore investors, NGOs (non governmental organisations) are also converting their dollars before they close early for Christmas and Uganda’s Diaspora,” said Faisal Bukenya, head of market making at Barclays Bank.

“On the other hand dollar demand from importers is muted because most of them already brought in their shipments for holiday shoppers,” he said.

The central Bank of Uganda will auction a two-year Treasury bond worth 95 billion shillings on Wednesday.

Fixed income traders expect the weighted average yield to remain around the 21.85 percent received at last month’s sale, the paper’s highest ever level at auction, after inflation slowed in November for the first time since June.

The regulator has hiked interest rates in the second half of the year to fight runaway inflation, helping drive up yields along the curve and bring the shilling off a record low.

Uganda’s year-on-year rate of inflation fell to 29 percent in November from 30.4 percent in October.

“The risk is still inclined towards a further appreciation of the unit (shilling), said Stanbic Bank Uganda in a market report.

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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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