Currency analysts predict that the Uganda Shilling might continue to depreciate against the US dollar for some time due to increased demand for the Greenback.
With the dollar demand staying high amidst reduced inflows, the Uganda shilling is expected to trade in the range of Shs2590 buying and Shs2,630 selling per US dollar.
Yesterday, the shilling opened trading at 2,609.29 buying and s2,619.14 selling per US dollar. By midday, it was trading at 2,615.08 buying and 2,624.7 selling per US dollar.
The head of market making Barclays Bank Uganda, Mr Faisal Bukenya, told the Daily Monitor yesterday that currently, the demand for the US dollar is higher than inflows.
Mr Bukenya said the high demand for US dollars is coming from two major sectors of the economy manufacturing and energy.
He said the inflows of US dollars into Uganda has been flat due to aid cuts while the offshore investors also exited the market in the middle of last month due reduction in treasury bills and bonds yields (interest rates).
The weakening of the Uganda Shilling is also likely to pick up in imports. Bank of Uganda’s economic report of June 2014 indicates that Uganda’s import bill increased by 14.1 per cent on quarter to quarter which amounted to $1.397 billion (Shs364.617 trillion).
On June 25, Bank of Uganda, issued a statement saying the Shilling had depreciated against the US dollar by 2.3 per cent.
SOURCE: Daily Monitor