KAMPALA: The Ugandan shilling was firmer on Thursday, buoyed by tight liquidity and slumping demand as most importers took to the market sidelines, unwilling to buy greenbacks at current levels deemed expensive. At 0948 GMT commercial banks quoted the shilling at 3,665/3,675, stronger than Wednesday's close of 3,680/3,690.
"The market is taking a breather, we're not seeing much demand at the current level," said Shahzad Kamaluddin, trader at Crane Bank. "A lot of importer customers are waiting for the dollar to sort of ease off and then they can come in." Kamaluddin also said the supply of shillings was tight, cooling appetite for hard currency among interbank players.
The scarcity of shillings pushed rates on overnight funds to between 20-23 percent on Thursday from 18 percent at the beginning of the week, Kamaluddin said.
Traders say this week's Treasury bill auction, where a total of 170 billion shillings ($46.32 million) worth of debt was on offer, soaked up much of the liquidity that banks would be using to fund dollar positions.
So far this year, the local currency has lost 24.7 percent of its value against the dollar and its outlook is seen as weak on the back of a surging import bill and negative investor sentiment ahead of next year's elections.
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