At 0810 GMT commercial banks in Kampala quoted the local currency at 2,360/2,370, stronger than Friday's close of 2,375/2,385. "Businesses are winding down activity for people to go for holidays," said Ahmed Kalule, Treasury dealer at Bank of Africa.

"So (dollar) demand has almost dried up completely while the market is receiving some inflows from Ugandans abroad." After plummeting against the dollar for much of this year the shilling hit a record low of 2,901 against the greenback on Sep. 23.

A round of aggressive monetary policy tightening by the central bank, however, has seen it recover 18.5 percent of its value since. Bank of Uganda (BoU) paused its policy tightening this month, though, after inflationary pressures eased last month on lower food prices.

Year-on-year inflation in east Africa's third largest economy slowed to 29 percent in November after hitting a nearly 20-year record high of 30.4 percent in October.