Uganda’s central bank sold dollars in the domestic foreign-exchange market today to stabilize the East African nation’s currency, which fell to an 18-year low against the U.S. dollar.
“We intervened” to bring stability to the market, Paddy Turyamwijuka, deputy director of financial markets at the Bank of Uganda, said in a phone interview today from Kampala, the capital. He declined to provide further details.
On June 15, the central bank sold $20 million to stabilize the market following an outflow of $30 million caused by currency speculators, Governor Emmanuel Tumusiime-Mutebile said on June 16.
Uganda’s shilling has depreciated 7 percent against the dollar since Jan. 1 and is Africa’s second-worst performing currency this year, after the Kenyan shilling, according to Bloomberg data. The Ugandan shilling weakened 0.7 percent to 2,482 today, the lowest since June 22, 1993.
Inflation in the East African country surged to a 17-year high of 16 percent in May as food and fuel prices increased.
Uganda is scheduled to become an oil producer next year when Tullow Oil Plc is expected to start pumping crude and gas from the Lake Albert Basin. The country has an estimated 2.5 billion barrels of oil, with about 1 billion barrels in proven reserves, according to Tullow.