Uganda’s shilling extended gains for a second day Thursday after the central bank delivered its biggest interest-rate increase since 2011 and was suspected of selling dollars. The currency traded at 4,043 per dollar at 3:53 p.m. in London, strengthening 0.8% against the US unit. The shilling’s strength was driven by the Bank of Uganda’s 225-basis-point rate increase to 12% on Wednesday and its intervention in the foreign-exchange market, according to Stephen Kaboyo, managing director of Kampala-based Alpha Capital Partners.
The central bank may have offered as much as $30 million through dollar sales. Richard Nsubuga, head of trading at Absa Group Ltd’s Uganda unit, also confirmed central bank intervention. The central bank did not immediately respond to requests for comment on whether it had intervened in the currency market.
Governor Michael Atingi-Ego stated the exchange rate remained market determined, although the bank could use its tools to smooth out volatility.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing