KAMPALA: The Ugandan shilling recovered from early morning losses to trade flat for a second day on Wednesday, helped by expectations of dollar inflows due to a Treasury bill sale.
Traders said high liquidity and corporate demand was seen keeping a dampener on the local currency.
At 0843 GMT commercial banks quoted the currency of east Africa's third-largest economy as unchanged from Tuesday's close of 2,595/2,605, after pulling back from an intraday low of 2,598/2,608.
"In the morning players were tracking the dollar rally in international markets so we saw the shilling lose ground, but then expectations of flows from the auction weighed in and triggered a recovery," said Robert Mpuuga, trader at Housing Finance Bank.
"Nevertheless, there's healthy liquidity in the market, so we think there will be significant position taking in the interbank which will keep the shilling vulnerable."
Bank of Uganda was later on Wednesday due to release results of a Treasury bill auction of 91-, 182-, and 364-day tenures worth a combined 90 billion Ugandan shillings.
Some money market analysts had previously suggested the auction was unlikely to draw huge hard currency inflows because of a global cooling of appetite for emerging market assets after the US Federal Reserve's announcement it was intent on rolling back its stimulus packages.
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