The Uganda Shilling continued to depreciate against the Dollar on Thursday despite the intervention by Bank of Uganda (BOU) to stem the volatility.
On Thursday, it lost at least 0.7% of its value, with some bureaus and banks quoting it at a high of Ugx2840/2870. This a three year low: last seen in October 2011.
BOU had earlier on Thursday morning indicated that the depreciation was being accelerated by speculators in the market.
The intervention briefly stemmed the depreciation but as soon as they pulled out, the Uganda Shilling was back on trend that can be traced as far back as February 2014. In the last 12 months, the Shilling has depreciated by almost 13%.
BOU and market analysts have noted that the weakening shilling is as result global demand for the Dollar coupled with local demand especially from the banking and manufacturing sectors.
A BOU statement had noted that “Therefore, the Bank will take measures to tame the depreciation arising from the speculative tendencies.”
It did not specify whether the measures would only be to sale Dollars in the market or take further action against the speculators.
“This verbal intervention needs to backed up by actual selling of Dollars,” Stephen Kaboyo, Managing Partner, Alpha Capital Markets told our reporters.
Already, international perception of the Shilling is that it is the worst performing currency in Africa at the moment, according to Bloomberg. The Financial Times also went on to note: “Uganda Shilling gets a shelling.”
If the Shilling was expected make gains against the Dollar, that happened briefly on Thursday. This, as analysts were vindicated after revealed that the intervention came a little too late.