KAMPALA: The Ugandan shilling extended gains for a second consecutive trading session on Tuesday, after commercial banks sold dollars following multiple central bank interventions dampened demand for the U.S. currency.
At 0915 GMT commercial banks quoted the shilling at 2,845/2,855, stronger than Friday's close of 2,858/2,868. Markets were closed on Monday for a national holiday in Uganda.
"We're experiencing the after-effects of the central bank action... the interventions burnt speculators," said Isaac Iga, chief dealer at Orient Bank.
Bank of Uganda (BoU) has sold dollars five times this month to try to stem the depreciation of the local currency after it came under pressure mainly from commercial banks.
Traders say banks were keeping long dollar positions on worries the greenback was likely to strengthen against the local currency.
BoU has said some of the depreciation was caused by speculation and vowed to tame any volatility in the market.
Market players say BoU appears unwilling to let the local currency, which is down 2.6 percent against the greenback this month, weaken past the 2,900 level against the dollar.
"Most banks are now rolling back their positions after all the dollars pumped in by central bank," Iga said.
BoU has not disclosed how much it has sold in this month's interventions.
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