By Fred Ojambo ~ Uganda’s shilling, the world’s second worst-performing currency in the last month, climbed for a second day against the dollar as foreign investors bought the local currency to participate in a sale of three-year bonds.

The currency of East Africa’s third-biggest economy appreciated 0.4 percent to 2,775 per dollar at 12:46 p.m. in the capital, Kampala, according to data compiled by Bloomberg.

Uganda sold 95 billion shillings ($34 million) of 10.25 percent bonds due 2014 yesterday, the central bank said. The yield climbed to 15.776 percent, the highest since November 2008, compared with 11.617 percent at the last sale on March 3. Borrowing costs are rising as a surge in food and fuel prices pushed inflation to a more than 18-year high of 18.7 percent in July from 15.7 percent in June.

“Yesterday’s sale of the bond attracted some dollar inflows and resulted in some gains,” Ahmed Kalule, the head of currency trading at Bank of Africa Uganda Ltd., said by phone from Kampala. “Otherwise there remains a deficiency of the dollar of the dollar which might result in the shilling weakening.”

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net

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