Absa has cautioned that the shilling is expected to be under pressure
due to the widening gap between export earnings and expenditure on
imports.
The shilling has been largely been stable since the
beginning of the year. However, Absa says a number of factors, key among
them, the widening current account deficit and the weakening of the
global economy due to Covid-19 are expected to destabilise the
stability.
While presenting a research conducted by Absa during a
media round table, Mr Ridle Markus, the Absa Group non-equity senior
research analyst, said Uganda’s economy has been weakened by Covid-19 at
a time when it was already experiencing difficulties.
Therefore,
he said that whereas the shilling has been relatively stable since the
beginning of the year”, it is going to be under pressure due to the
weakening in the external account”.
Mr Ridle projected the effect will weaken the shilling to about or above Shs3,800 per dollar in the near future.
The
shilling yesterday opened strong, selling at Shs3,696.09 against the
dollar, according to Bank of Uganda, after sustained appreciation on the
back of increased inflows from offshore investors, non-governmental
organisations and commodity exporters.
However, Absa said the
current account deficit is rapidly widening, which is expected to
distort gains made by the shilling in the last one year.
Mr Ridle
also noted that the economy continues to face a lot of uncertainties,
which will require governments to prioritise interventions with the need
to drive economic recovery.
Government, has, since August,
provided stimulus packages to selected sectors with the first
beneficiaries being SMEs and tourism.
UDB recently called players in
tourism to apply for a Shs64b stimulus that seeks to provide to support
recovery of businesses weakened by Covid-19.
Mr Ridle also said
the forthcoming elections will have little or no negative impact on the
economy, noting that since the country had escaped recession, it will
register growth of between 4 and 5 per cent next year.
However, he said, the growth will most mostly depend of how global issues pun out than on local disruptions.
According
to Bank of Uganda, in September, the shilling depreciated slightly
against the dollar by 0.5 per cent to average at a mid-term rate of
Shs3,695.1.
No comments :
Post a Comment