Uganda shilling at new low vs dollar, seen falling lower

By Elias Biryabarema

KAMPALA (Reuters) - The Uganda shilling slumped against the dollar and broke through its June 30 record low on Tuesday, weighed down by surging interbank and oil sector demand, and traders said further decline was possible amidst a gloomy world economy.

At 0825 GMT commercial banks in Kampala quoted the shilling at 2,700/2,720 against the dollar, down from Monday's close of 2,685/2,695.

Traders said the local currency was being hurt by the weakening Kenyan shilling, plummeting global stocks and broad-based dollar demand. Kenya is a key trading partner of east Africa's third largest economy.

"Naturally the shilling's performance is mirroring what's happening elsewhere in the global economy and the weakness of the Kenyan currency," said Mark Bitarabeho, a trader at Standard Chartered Bank Uganda.

The Kenyan shilling fell to a new record low of 94.75 against the dollar on Tuesday, weighed down by importers' demand for the greenback, a global sell-off of assets and a central bank injection of shillings.

Bitarabeho said the Uganda shilling was likely to fall further in the days ahead.

"We have a bond auction tomorrow but it won't help because foreign players are worried about the shilling's weakness plus their own economies are in trouble," he said.

The central bank, Bank of Uganda, is expected to hold a 95 billion shillings Treasury bill auction on Wednesday.