Ugandan shilling inches down, rise in dollar demand may not last

KAMPALA: The Ugandan shilling weakened slightly on Tuesday after demand for dollars on the interbank market rose.

At 0953 GMT, commercial banks quoted the currency of Africa's largest coffee exporter at 2,530/2,540, slightly down from Monday's close of 2,527/2,537.

Traders said the shilling could claw back the losses in the course of the trading session.

"I don't expect this (dollar) demand to last ... the shilling will likely pull back from this loss," said Faisal Bukenya, head of market making at Barclays Bank.

But an expected surge in liquidity, as the government settles its bills ahead of the close of its financial year at the end of next month, could put pressure on the shilling, market participants said.

The shilling is only 0.4 percent weaker against the dollar in the year to date, kept largely stable by lower (dollar) demand from importers, and supportive action by the central bank.