KAMPALA: The Ugandan shilling lost ground against the dollar on Wednesday, as importers bought the U.S. currency, but traders said the shilling could recoup losses if debt yields rise at auction later in the day.
At 1118 GMT commercial banks quoted the shilling against the dollar at 2,605/2,615, weaker than Tuesday's close of 2,600/2,610.
"Healthy demand has been coming in and pushing the shilling (multiple) higher," said Centenary Bank Trader Sage Daniel Muganza, citing dollar demand from importers.
Faisal Bukenya, head of market making at Barclays Bank said the significant appetite for the dollar was mainly coming from firms in the energy and manufacturing sectors, but the local currency could get a boost during a debt auction.
"If the results of today's auction show a surge in yields then I anticipate the shilling might climb back (strengthen)."
The central Bank of Uganda was expected later on Wednesday to release results of a Treasury bill auction worth 145 billion shillings ($55.7 million).
A recent surge in interest rates on Ugandan debt has prompted expectations of strong offshore demand and an increase in flows of hard currency, potentially supporting the shilling.
The shilling is down 3.2 percent against the dollar in the year to date.
Bukenya said demand for the shilling was showing resistance at 2,600 and support at 2,620.
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