KAMPALA: The Ugandan shilling strengthened on Monday due to dwindling dollar demand and a central bank mop-up of excess liquidity, traders said.
At market close at 1300GMT commercial banks quoted the shilling at 2,760/2,770, a touch stronger than Friday's close of 2,765/2,775.
"Because business activity is slowing, demand for the greenback is scarce," said Faisal Bukenya, head of market making at Barclays Bank.
"The shilling also benefited from BoU (Bank of Uganda)'s repo."
On Wednesday BoU removed a total of 339 billion shillings ($122.92 million) worth of excess liquidity from the market via a seven day repo.
Removing excess local currency liquidity makes it relatively more expensive to hold longer dollar positions.
The shilling is now 8.7 percent weaker against the greenback so far this year.
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