KAMPALA: The Ugandan shilling lost ground on Tuesday on dollar demand from banks and worries that Western donors were unlikely to restore aid swiftly after a widely criticised anti-gay law was nullified last week.
At 0927 GMT commercial banks quoted the shilling at 2,615/2,625, weaker than Monday's close of 2,610/2,620.
"There's demand by some of the banks who are short on the dollar and it's hitting the shilling," said Faisal Bukenya, head of market making at Barclays Bank. "Some players also think that donors won't restore aid immediately, as had been expected."
The shilling firmed after Uganda's constitutional court struck down on Friday the anti-gay law, whose adoption in February prompted Western donors to suspend or cancel aid.
The shilling has lost 3.6 percent against the dollar this year but some traders say in the medium term it is likely to find support from a recovery in yields on government debt.
Bank of Uganda is due to auction 140 billion shillings ($53.56 million) worth of Treasury bills of all maturities on Wednesday.
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