Uganda to stem ‘speculation’ as Shilling falls

Uganda’s central bank said it would take measures to halt a slide in the shilling it blamed on speculators as the currency dropped to the lowest since October 2011.

“The Bank of Uganda has noted some speculative tendencies that have exacerbated the depreciation,” the regulator said in an e-mailed statement today. “The bank will take measures to tame the depreciation.”

Uganda’s shilling has retreated 2.9 per cent in 2015, the worst performer among 24 African currencies tracked by Bloomberg. Central Bank Governor Emmanuel Tumusiime-Mutebile warned of inflation pressure before the 2016 election from stronger domestic demand and exchange-rate moves in a speech December 1, even as he kept the benchmark interest rate on hold at 11 per cent less than two weeks later.

The statement didn’t give details on what measures it would take. Uganda’s shilling weakened 0.7 per cent to 2,855 per dollar by 12.35pm in Kampala, the capital. Yields on 12-month debt in the local currency rose to 14.2 per cent at an auction yesterday, the highest since February 2013, according to central bank data compiled by Bloomberg.