KAMPALA: The Ugandan shilling was stable on Friday, unmoved by inflation data that showed a slowdown in prices this month, and traders said it would likely be range-bound next week ahead of the central bank's rate decision.
At 1117 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,525/2,530 against the dollar, unchanged from Thursday's close.
Consumer price index data released by the statistics office on Friday showed year-on-year inflation in November slowed to 6.8 percent from October's 8.1 percent, driven down by a drop in food costs.
"Outlook indicates a relatively stable market holding at current levels with a mild appreciation bias primarily on account of end-month conversions," said Stephen Kaboyo of Alpha Capital Partners. End-month flows mostly come from charities looking for the local currency to pay salaries and meet other operational expenses.
"A little down the road, the market is bracing itself for ultra-low customer demand as most corporates wind down business ahead of the Christmas season," Kaboyo added.
The shilling has mostly oscillated in the 2,500-2,600 range this year, helped by subdued demand for the dollar at a time of relatively tight monetary policy.
The inflation data raised expectations that the central bank will leave its benchmark rate unchanged at 12 percent at its policy meeting next week.
Brenda Akumu, a trader at KCB Uganda, said the market was expecting some demand from the manufacturing sector next week but that demand would likely be matched by inflows from charities, helping keep the shilling in a stable range.
"Trading activity also won't be much, as players will want to wait and see how the central bank reacts to inflation," she said.
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