KAMPALA: The Ugandan shilling gained on Monday as banks sold off dollars, with a favourable sovereign rating by Fitch helping to buoy investor confidence.
At 0931 GMT, commercial banks quoted the shilling at 2,597/2,607, stronger than Friday's close of 2,600/2,610.
"There has been an offloading of positions in the interbank" that is strengthening the shilling, said Isaac Iga, chief dealer at Orient Bank.
"I think Fitch's rating created a positive sentiment especially for offshore people ... the tone will likely continue to be bullish," he said.
On Friday ratings agency Fitch affirmed the east African country's credit rating at B with a positive outlook, citing strong average economic growth of 5.5 percent for the last five years and sound macroeconomic policies.
Iga also said he expected greater participation by offshore investors at this week's Treasury bill auction. That may create more hard currency inflows, which could strengthen the shilling.
A total of 140 billion shillings ($53.85 million) worth of Treasury bills of all maturities are up for sale.
Brenda Akumu, trader at KCB Uganda, said some dollar demand from energy sector firms was likely slow the pace of the shilling's appreciation.
The Ugandan shilling is 3 percent weaker against the greenback so far this year.
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