KAMPALA: The Ugandan shilling was stable on Tuesday partly supported by a mop up of excess liquidity by the central bank, but traders said end month dollar demand could weaken the local currency.
At 0843 GMT commercial banks quoted the shilling at 2,618/2,628, little-changed from Monday's close 2,620/2,630. "The liquidity sterilisation that was done yesterday is helping keep the shilling stable," said Ali Abbas, trader at Crane Bank.
The central bank or Bank of Uganda (BoU) on Monday used repurchase agreements to drain a total of 276 billion shillings ($105.46 million) from the money market.
"We're looking out for possible month-end demand which could steal some energy from the shilling," Abbas said. End-month demand typically comes from manufacturing firms looking for hard currency to pay for shipments of raw materials to cover the following month's production.
Faisal Bukenya, head of market making at Barclays Bank said the shilling was likely to trade between a resistance level of 2,610 and a support level of 2,630 in the next few weeks.
The Ugandan shilling is down 3.7 percent against the dollar so far this year.
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