Uganda Central Bank Buys Dollars as Shilling Firms against the green bark

15th-Dec-2011

Uganda's central bank was in the market early on Thursday, seeking to buy an unspecified amount of foreign exchange after the shilling firmed against the dollar, traders said.

At 0745 GMT, commercial banks quoted the shilling at 2,385/2,394 to the dollar, compared with Wednesday's close of 2,380/2,390, and off 2,368/2,378 before the central bank came into the market.

"The shilling opened on a volatile note and dropped sharply low (strengthened) before the central bank intervened on the buying side," said Faisal Bukenya, head of market making at Barclays Bank Uganda.

"The pace of business is slowing down as the year ends and demand for dollars is dropping sharply and that's putting pressure on it against the shilling."

The Bank of Uganda has in the past come to the market to sell foreign exchange to stem the shilling's slide.

The shilling hit a six-month high against the dollar on Wednesday. It is off an all-time low of 2,901 touched on Sept. 23, but is still 2 percent weaker in the year to date.

Reuters