Uganda’s shilling slumped to a two-year low against the dollar, weakening to 3,925 shillings per dollar in early trade, weighed down by surging foreign-exchange demand in energy, manufacturing and telecommunications. The Bank of Uganda has not intervened to stem the slide and “has remained on the sidelines,” according to Richard Nsubuga of Absa Bank Ltd. Even dollar inflows from commodity exporters, remittances and state-linked institutional investors have been insufficient to offset the strong underlying demand. Offshore activity has been driven by stop-loss triggers and selective conversions of bond sale proceeds.

Uganda’s local-currency bond market has attracted foreign institutional investors, with JPMorgan identifying nine instruments valued at an estimated $9.4 billion for inclusion in a new frontier index.