Shilling value drops as coronavirus decimates economy

Uganda’s shillings has continued to fall over coronavirus effect (PHOTO/File). KAMPALA – The value of the Shilling has suffered a hit in the face of coronavirus amid skyrocketing demand for the US dollar.

By Thursday, the Shilling was trading at about Shs3,900, with many currency traders saying it could reach Shs4,000 by Friday, March 27.

Intervention of the Bank of Uganda has not done much to stabilize the currency given that there is limited trading activity both locally and internationally.

Mr Stephen Kaboyo, the managing partner of Alpha Capital Markets Authority, attributed the rise to panic among investors who are no longer investing in risky assets that may not bring returns soon as coronavirus impact persists.

He added that at the moment, efforts to stabilize the currency are not effective.

“Any efforts to defend the currency at this stage would be wasted because of the sentiment driven weakness of the shilling,” Kaboyo said.

Catherine Kijjaggulwe, the Absa Bank head of trading, added out that the shilling is taking a hit as offshore investors are fleeing frontier and emerging markets, such as Uganda, for safe havens like the UK and US.

All regional currencies are suffering the same effects.

The Kenyan shilling at Thursday’s trading exchanged at a record low of Sh109.3 against the dollar, sliding past the worst record of October 2011.

Most commercial banks in Nairobi’s city centre were buying the dollar at an average of Sh98 and selling it at Sh107 and more in what has sent the local currency tumbling past its worst performance in the past decade.

Stanbic Bank was selling the greenback at Sh109.38 at midday Thursday while Co-operative Bank was selling at Sh107.85, Equity Bank (Sh107.45) and GT Bank (Sh107).Currency dealers said the demand for the greenback was triggered by the Central Bank of Kenya (CBK), which has been actively buying dollars, worth Sh40 billion, from the Kenyan market to build its war-chest when the worst comes.

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