KAMPALA: The Ugandan shilling traded flat against the dollar on Friday but could come under short term pressure as companies make dividend payments to foreign owners, traders said.
Market players said the investors were also awaiting the outcome of a legal challenge to the result of this month's presidential election in Kenya, Uganda's neighbour and biggest trading partner.
"Where we are, I think the shilling's strengthening has just about reached the bottom. It's unlikely to move further down (firm)," said a trader at a leading commercial bank.
"In the next few weeks most multinationals will be rushing to remit dividends and the shilling should drop a few notches. The market will also be keen on developments in Kenyan politics."
At 1045 GMT commercial banks quoted the currency of east Africa's third biggest economy at 2,635/2,645, unchanged from Friday's close.
Most of Uganda's biggest banks, manufacturers and retailers are either wholly or part foreign-owned and have to convert some of their local currency earnings into dollars to pay foreign shareholders.
The shilling is up nearly 2 percent against the greenback so far this year but has been pegged in a range of 2,620-2,660 this month, which some traders said was largely due to persistently high interest rates.
"In the short run the shilling is expected to trade range-bound 2,620/2,660, with no game changer in sight, in a short trading week ahead of a long Easter weekend," said Stephen Kaboyo, managing director of Alpha Capital Partners.
Kenya's outgoing prime minister Raila Odinga refuses to accept defeat by President-elect Uhuru Kenyatta, who narrowly avoided a decisive second round against Odinga when he secured 50.07 percent of the votes cast. To win outright a candidate had to win more than half of total votes.
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