Uganda’s shilling weakened, extending its decline against the U.S. currency this week, driven by demand for dollars by oil importers. The currency of East Africa’s third-biggest economy depreciated as much as 0.6 percent to 2,877.05, and traded 0.4 percent weaker at 2,870 by 12:11 p.m. in the capital, Kampala, taking its decline this week to 0.7 percent. “Dollar demand is coming in, especially from the energy sector, which sought substantial amounts,” Ahmed Kalule, the head of currency trading at Bank of Africa Uganda Ltd., said by phone from Kampala. “A new month has just started and people are seeking foreign currency for imports.” Demand for the U.S. currency was boosted by the increase in money supply today after the overnight borrowing rate in the interbank market eased to 15 percent, he said. The average rate was 19.67 percent in September, the central bank said on Oct. 4. The shilling remains under pressure as importers seek the greenback to bring in goods for sale during the Christmas season, Kalule said. It may weaken to 2,895 by the end of next week, he said. Uganda’s shilling reached 2,897.50 on Sept. 23, the weakest since June 1993, on concern Europe’s debt crisis will weaken riskier assets further, increasing demand for dollars as a safe- haven investment. The currency has slipped 19.5 percent this year to the dollar, making it the second-worst performer after Kenya’s shilling. A surge in food and fuel prices pushed inflation to a more than 18-year high of 28.3 percent this month from 21.4 percent in August, the Uganda Bureau of Statistics said today. To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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