Uganda shilling remains steady against the Greenback ahead of Treasury bill auction

The Ugandan shilling held steady against the dollar on Friday as traders avoided taking positions ahead of a Treasury bill auction next week that will provide a gauge of foreign investor appetite for Uganda's debt.

At 0745 GMT, commercial banks posted the shilling at 2,465/2,475 on Friday, unchanged from Thursday's close.

"Players are holding their cards close to their chest as they eye the outcome of the auction," said Ahmed Kalule, a trader at Bank of Africa.

"The shilling is likely to remain fairly stable until after results are out, when a clear picture of where we're headed will have emerged," Kalule said.

Bank of Uganda is scheduled to auction 120 billion shillings worth of 91-, 182-, and 364-day Treasury bills on May 16.

Dollar inflows from offshore buyers of government securities usually support the local currency in an economy that lacks a vibrant export sector.

He said yields on the three tenors of Treasury bills on offer were likely to edge up slightly due to sluggish liquidity in the market.

At the last auction, on May 2, the weighted average yield on benchmark 91-day paper inched lower to 18.0 percent from 18.1 at the previous sale.

The central bank left its key lending rate unchanged at 21 percent for the second consecutive meeting this month due to lingering price pressures.

The decision meant yields would remain high, after slumping following an unexpected rate cut in March, and pushed the shilling to a 2012 low of 2,620.

Reuters
11-May-2012