December 31, 2013 / 1:07 PM / 4 years ago

Ugandan shilling weakens, policy rate cut eyed

By Elias Biryabarema
    KAMPALA, Dec. 31 - The Ugandan shilling fell slightly
on Tuesday, weakened by dollar demand from commercial banks and
growing expectations the central bank will cut its policy rate
again after inflation fell further in December. 
    At 1235 GMT commercial banks quoted the currency of east
Africa's third-largest economy at 2,523/2,533, a touch weaker 
than Monday's close of 2,520/2,525. 
    "There are no (dollar) inflows while some banks are buying
because they're in the process of closing their books for this
year," said Shahzad Kamaluddin, trader at Crane Bank.  
    "We're also anticipating some (policy) easing from the Bank
of Uganda because the inflation picture is supportive." 
    Government data showed the headline inflation rate slowed to
6.7 percent in the year to December from 6.8 percent a month
earlier, due largely to a slower rise in non-food prices.
    "I think the inflation trend clearly favours additional
policy easing next month," said Faisal Bukenya, head of market
making at Barclays Bank in Kampala. 
    Bukenya said the deadly unrest in neighbouring South Sudan,
a leading export destination for Ugandan goods, could lead to a
further fall in inflation. The violence has cut off key trade
routes between Uganda and South Sudan's booming capital, Juba.
    The Bank of Uganda is due to announce its benchmark Central
Bank Rate (CBR) for next month on January 3. 
    
   UGX Spot Rate..... 
   Ugandan Shilling Money Guide.... 
   Calculated Cross Rates.......... 
   Deposits..................... 
   Deposits & Forwards............. 
   Uganda Equities Guide....... 
   Uganda All Share Index........ 
   Shilling background ..... 
   Ugandan Debt Guide............ 
   All Uganda Bonds............. 
   Uganda T-Bills.............. 
   Uganda Benchmark............. 
   Central Bank ................ 
   Ugandan Contributor Index.... 
   Uganda Coffee Prices....... 
 

 (Reporting by Elias Biryabarema; Editing by Richard Lough)

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