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Ugandan shilling drops to new low on deficit, public spending fears
July 6, 2015 / 11:14 AM / 2 years ago

Ugandan shilling drops to new low on deficit, public spending fears

KAMPALA, July 6 (Reuters) - The Ugandan shilling 
touched a new low against the dollar on Monday as angst over the
impact of conflict in major export markets - Sudan and Burundi -
and fears of rampant pre-election spending dominated trading.
    Traders said dollar strength also weighed on the local
currency and that trend was set to persist.
    By 0941 GMT commercial banks quoted the shilling at
3,435/3,445, an all-time low and down from Friday's close of
3,380/3,390. The shilling has lost a fifth of its value against
the dollar this year. 
    Falling exports, a surge in government imports for
transportation and infrastructure projects, fears over a public
spending spree before next year's elections and a widening
current account deficit were all contributing, dealers said.
    The shilling's depreciation has accelerated in recent weeks
on the back of strong interbank demand, they said.
    "The buying pressure is in the interbank market, we're not
seeing a lot corporate buyers," Barclays Bank head of market
making, Faisal Bukenya, said. 
    Reluctance by the central Bank of Uganda (BoU) to intervene
has also undermined market sentiment.
    BoU has suggested it was unlikely to intervene aggressively
to support the shilling because depreciation was unavoidable and
that keeping the shilling artificially strong was unsustainable.
    "Overall the shilling's tone will remain on the depreciation
side because the dollar is strong globally," Crane Bank trader,
Ali Abbas, said.
    
   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 George Obulutsa and
Louise Ireland)

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