KAMPALA: The Ugandan shilling strengthened on Friday, riding healthy inflows from offshore investors who participated in this week's Treasury auction, while company demand for dollars faded.
At 0926 GMT commercial banks quoted the shilling at 2,592/2,602, stronger than Thursday's close of 2,598/2,608.
"There are inflows from some of the offshore investors who took part in the auction," said Sage Daniel Muganza, trader at Centenary Bank.
"Corporate demand is low so those inflows are not being taken up and it's pushing up the shilling."
Strong offshore uptake of Ugandan debt typically supports the shilling as these investors have to convert their hard currency to pay up for their succesful bids.
The central bank or Bank of Uganda (BoU) sold a total of 145 billion shillings ($55.98 million) worth of Treasury bills of all maturities this week.
Traders say offshore appetite for Ugandan debt has surged in recent weeks, drawn by rising yields. At this week's auction rates rose across all tenors.
The shilling, which is down 2.8 percent against the greenback this year, has firmed in recent weeks on the back of subdued dollar demand, flows from offshore investors and improving relations between Uganda and western donors.
Another likely strengthening factor was a court decision overturning an anti-gay law that drew Western criticism and halted aid payments.
This month's central bank decision to leave its policy rate unchanged at 11 percent for August and September is expected to provide extra support for the local currency.
A trader at a leading commercial bank said the shilling could strengthen to about 2,500 shillings per dollar next week.
Comments
Comments are closed.