By Julius Businge
The Uganda Shilling is forecast to stabilise as the high US dollar demand from importers, which sent the local currency tumbling to a 13-month low in recent days, starts to recede, according to Dickson Magecha, the Forex Trader at Standard Chartered Bank
Magecha said at the end of the week commercial banks quoted the shilling at 2,675/2,785, weaker than last week’s close of 2,640/2,650, but better than the intra-week low of 2705/15 hit on Wednesday. A combination of soaring greenback demand from importers and offshore investors has pressured the shilling over the last two weeks, prompting the Central Bank to intervene several times to stem the fall.
In separate news, headline inflation in Uganda rose year-on-year for the first time in eight months in November, to 4.9% from 4.5%, according to official data from the Uganda Bureau of statistics released on Nov. 30
Analysts said the rise might have been fuelled by shopping for Christmas and the new year celebrations and would probably prove short-lived, with few implications for the Central Bank Policy. Consumer prices also increased 0.5% month-on-month.
The Bank of Uganda is expected to announce its latest decision on the benchmark Central Bank Rate (CBR) on Tuesday next week. This month the Central Bank cut its key rate by only 50 basis points rather than a widely expected 100 basis points, a decision analysts said reflected the Central Bank’s fears that further aggressive easing of its policy stance would hurt the local currency.