By Elias Biryabarema
KAMPALA (Reuters) – The Ugandan shilling was stable on Tuesday after the central bank said it was in the market to sell an undisclosed amount of dollars, helping the local currency regain some lost ground, but traders said it was likely to remain under pressure.
By 0637 GMT commercial banks quoted the shilling at 2,610/2,620, unchanged from its Monday close.
The shilling had hit 2,615/2,625 against the greenback before the central bank intervened to pump dollars into the market and soak up the demand pressure.
“The shilling was being undermined by multiple factors from negative sentiment to demand (for dollars) from manufacturers and commercial banks,” said Barclays head of market making, Faisal Bukenya.
“BoU’s (Bank of Uganda’s) intervention has pushed it up a bit but we think that’s a knee-jerk reaction that could be short-lived.”
He said the shilling was also being undermined by persistent negative sentiment from last week’s U.S. sanctions against Uganda over the widely condemned anti-gay law.
Market players also say the shilling, which is now 3.4 percent down against the dollar this year, was also being hit by expectations of further monetary policy easing this month.
