KAMPALA: The Ugandan shilling hit an all-time low on Wednesday due to dollar demand from commercial banks preparing to pay dividends abroad.
At 1117 GMT commercial banks quoted the shilling at 2,930/2,940 weaker than Tuesday's closing of 2,900/2,910.
"What we have seen is that appetite from banks has been wildly huge and it's causing crazy losses for the shilling," said Ali Abbas, trader at Crane Bank.
Traders say most foreign-owned commercial banks are taking positions as they prepare to pay 2014 dividends whiles others are wary of being caught short against the backdrop of a globally bullish greenback.
The shilling is now trading weaker than its previous all-time low of 2,910/2,920, last reached in September 2011 and has so far lost 5.5 percent against the dollar this year.
The renewed pressure on the shilling is seen likely to trigger the intervention of the central Bank of Uganda which has previously vowed to stem any volatility of the local currency, traders said.
In January the central bank intervened five times selling dollars to try to slow the shilling's depreciation momentum.
Isaac Iga, chief dealer at Orient Bank, said some limited greenback demand was also coming in from corporates.
"The sense among most corporates however is that these levels are crazy," he said.
"They seem comfortable staying on the sidelines until the dollar has come down a little bit."
Comments
Comments are closed.