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REFILE-Ugandan shilling extends losses as manufacturers buy dollars
March 12, 2015 / 10:18 AM / 3 years ago

REFILE-Ugandan shilling extends losses as manufacturers buy dollars

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KAMPALA, March 12 (Reuters) - The Ugandan shilling maintained its losing streak on Thursday, hurt by sustained dollar demand from manufacturers while forieign investors sold off their local debt.

At 0836 GMT commercial banks quoted the shilling at 3,070/3,080, the latest in a series of all-time record lows this year. It closed at 3,040/3,050 on Wednesday.

“Some manufacturers had decided to stay on the sidelines hoping the unit would pull back but that illusion is gone and they’re now joining the party,” said Isaac Iga, chief dealer at Orient Bank.

“Strong demand is also coming in from offshore investors cutting positions in government debt.”

Iga said although rates on Uganda government debt were high, the shilling’s relentless depreciation was erasing any potential profits and spurring offshore traders to sell their bonds.

Since January, losses have been piling on the local currency, undermined by the global strength of the dollar. More recently, the shilling has weakened on strong appetite from foreign-owned firms preparing to pay 2014 dividends.

The central bank or Bank of Uganda (BoU) has so far sold dollars seven times to halt the losses without much success.

Traders say concern over increased spending proposed by the government for this financial year are rattling the markets.

The government has asked parliament to approve an additional 800 billion shillings ($259 million) for spending in the 2014/15 fiscal year, representing a 5.3 percent budget increase.

Faisal Bukenya, head of market making at Barclays Bank, said banks were also exerting demand for the U.S. currency to build positions in anticipation of further weakening of the shilling.

So far this year, the shilling has lost 9.8 percent of its value against the greenback.

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....... ($1 = 3,088.0000 Ugandan shillings) (Reporting by Elias Biryabarema; Editing by James Macharia)

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