KAMPALA: The Ugandan shilling weakened on Monday, touching a new all-time low, undermined by demand for dollars from manufacturing and energy sectors.
At 0921 GMT commercial banks quoted the shilling at 2,965/2,975, weaker than Friday's close of 2,955/2,965.
The depreciation extended last week's losses and the local currency is now eyeing the key psychological level of 3,000.
"Demand is coming in from players in manufacturing and energy firms," said Faisal Bukenya, head of market making at Barclays Bank.
The local currency came under renewed pressure last week with traders attributing much of the demand to corporate firms buying hard currency in preparation for 2014 dividend payments.
Bank of Uganda, the central bank, was forced to sell dollars last week to slow down the depreciation momentum of the shilling which has lost 6.7 percent of its value so far this year.
David Bagambe, trader at Diamond Trust Bank, said the shilling's depreciation was also being driven by speculation.
"The fact that we're so close to the 3,000 mark makes everyone think we'll inevitably get there," he said. "So people are taking positions purely on that sentiment even if the shilling might self-correct and recover."
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