adminKampala. – Uganda’s shilling fell most since August against the dollar as donors threatened to cut aid after President Yoweri Museveni signed a law that carries life sentences for homosexuality. Denmark and Norway halted the equivalent of about US$17 million in assistance, while Swedish Finance Minister Anders Borg said the nation is reconsidering its programme.
President Museveni said he was motivated to sign the new law on February 24 after scientists in Uganda found no genetic link to homosexuality.
The shilling, Africa’s third-best performing currency this year, pared its 2014 rally as it dropped for a third straight day.
“The shilling is weakening due to the homosexuality bill which was signed this week,” Faisal Bukenya, a foreign-currency trader at Barclays Bank Uganda Ltd, said by phone today from Kampala.
“Donors are threatening to cut aid due to the new piece of legislation that was passed by the president.” The currency of East Africa’s third-biggest economy fell as much as 1,4 percent, the most on an intraday basis since yesterday, and traded 1 percent lower at 2,485.10 per dollar in Kampala, the capital. The shilling has gained 1,7 percent this year.
Yields on local-currency bonds due November 2028 were unchanged at 14,85 percent and have dropped 10 basis points, or 0,1 percentage point, in 2014, according to Standard Chartered Plc data compiled by Bloomberg.
The Bank of Uganda auctions 70 billion shillings (US$28 million) of 15-year paper today. – Bloomberg.
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