KAMPALA – The Ugandan shilling traded flat on Tuesday and market players said its next move would probably depend on foreign investor demand at Wednesday’s Treasury bill auction.
Commercial banks in Kampala quoted the shilling at 2,580/2,590, unchanged from Monday’s close.
The Bank of Uganda (BoU) is due to sell 100 billion shillings ($38.76 million) worth of Treasury bills of all tenors on Wednesday.
Fixed income traders anticipate strong offshore participation, which would lift the shilling. Disappointing foreign demand would leave the shilling treading water, traders said.
The shilling has gained almost 4 percent against the dollar this year as the central bank has mopped up excess money market liquidity and left its key rate on hold, resisting further cuts despite inflation slowing steadily to 3.4 percent in April.
In a market note, Centenary Bank forecast the central bank would continue mopping up excess liquidity in the interbank money market.
“This will ultimately lend support to the shilling,”Centenary Bank said.
Reuters