Uganda’s shilling extended losses on Wednesday as banks sought to cover short dollar positions amid uncertainty before next month’s presidential election and traders also cited an excess in local currency liquidity.
By 0948 GMT, commercial banks quoted the shilling at 3,475/3,485, compared with Tuesday’s close of 3,450/3,460. The shilling has lost nearly 3 percent of its value against the dollar so far this year.
“There’s general uncertainty being generated by the coming election so there’s a lot of speculation-driven demand by banks to cover short positions,” said Shahzad Kamaluddin, a trader at Crane Bank. He also noted a lot of shilling liquidity.
The presidential election is due on Feb. 18, and some analysts are concerned about possible vote-related violence.