Uganda’s central bank said on Tuesday it had sold dollars after a sharp depreciation of the shilling amid ongoing fears about the potential economic damage from the outbreak of the coronavirus pandemic in the East African nation.
At 0857 GMT, commercial banks quoted the shilling at 3,745/3,755 after weakening to as low as 3,760/3,670 in early morning trading. It closed Monday at 3,735/3,745.
“We are intervening to stem volatility in the market,” David Sajjabi, the central bank’s director for financial markets told Reuters.
“We saw a depreciation yesterday, as well as this morning, so we made the decision to intervene on the sell side.”
Uganda has no confirmed coronavirus cases, which have been reported in its neighbours Kenya, Rwanda, Tanzania and Democratic Republic of Congo.
Faisal Bukenya, managing director at Pay Uganda, a forex dealer said an upsurge in offshore investor demand and slowing remittances were weakening the shilling.
The coronavirus outbreak and its global economic impact have pushed offshore investors to move funds from riskier emerging economies like Uganda.
“Also people are not working in some parts of the west, so remittances from Diaspora workers have dwindled,” Bukenya said.