That is nearly 3% depreciation from the beginning of the week at 2,610 levels.

The Bank of Uganda says there has been sizable foreign exchange demand emerging from corporate world while the global economic outlook has not helped to tame down East Africa currencies from weakening in the very recent past.

“Central bank raised concerns on the currency at mid-week, with a mild intervention but it appears fundamentals are still pointing northwards,” the Bank said in a statement.

The Bank says short term funding in Ugandan shilling are currently  prohibitive ( with over-night rates as high as 18%) for market players and this is somehow helping the shilling from free-falling.

The shilling is currently holding key resistance at 2,710 in the short term, which if violated, will see the Uganda currency falling to an all time high of 2,800 to the US dollar.

The post Bank of Uganda concerned at continued depreciation of shilling first appeared on Uganda Multimedia News & Information.

The Director of Research at the central Bank Adam Mugume says the move is vital because the Central Bank uses the money in circulation and money held by Commercial Banks to control the economy.

Mugume explains that commercial Banks who borrow from Bank of Uganda are charged an interest of 10% making it less attractive for inter-Bank borrowing which is at 9%.

The move is the latest in efforts to curtail current inflation that stands at above 11% and to give the Uganda shillings some ground on the US dollar.

Despite early week gains, the Uganda shilling has in recent days been dropping in value to the US dollar, with US$1 being exchanged for 2,360 Uganda shillings.

Ultimate Media

The post Bank of Uganda tightens circulation Uganda shilling to curb weakness against US dollar first appeared on Uganda Multimedia News & Information.