KAMPALA: The Ugandan shilling strengthened on Friday, buoyed by interbank dollar sales in preparation of local tax payments next week and a slowdown in corporate appetite for the greenback.
At 0935 GMT commercial banks quoted the shilling at 3,475/3,485, firmer than Thursday's close of 3,495/3,505.
"Some banks are short on the local currency. They're doing conversions to have enough shilling for tax payments next week," said Ali Abbas, trader at Crane Bank.
Abbas said corporate dollar demand was also minimal, giving the shilling further support.
So far this year the shilling has lost 20 percent against the dollar and traders say it was seen under pressure due to concerns over the possibility of instability ahead of election in February.
"Weak fundamentals will continue to be the primary determinant of shilling direction," Alpha Capital Partners said in its market report.
Traders say the fundamentals driving the shilling's direction include Uganda's rising fiscal and current account deficits.
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