Uganda’s shilling weakened for the first time in three days against the dollar as companies sought the greenback after the local currency appreciated 1.5 percent against it in the last two days.
The currency of East Africa’s third-biggest economy depreciated as much as 1.1 percent, the most since Sept. 22, and was 0.8 percent weaker at 2,861.5 per dollar by 10.31 a.m. in the capital, Kampala, according to data compiled by Bloomberg.
“The shilling weakened because there is always outstanding demand,” Benon Okwenje, the head of currency trading at Stanbic Bank Uganda Ltd., said by phone from Kampala. “People are seeing these rates as good enough to buy the dollar after the shilling gained in the last few days.”
Uganda’s shilling reached 2,897.50 against the dollar on Sept. 23, the weakest since June 1993, as concern Europe’s banks will face funding problems should Greece default on its debt spurred investors to pull money from emerging and frontier markets. The currency appreciated in the last two days after the central bank sold dollars and non-governmental organizations received dollars from their funders.
The currency slipped 19 percent this year to the dollar, making it the second-worst performer after Kenya’s shilling. A surge in food and fuel prices pushed inflation to an 18-year high of 21.4 percent in August from 18.8 percent in July, the Uganda Bureau of Statistics said on Aug. 31.
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