KAMPALA: The Ugandan shilling was unchanged on Friday in slow trading but was forecast to strengthen, helped by the central bank mopping up excess liquidity and reduced corporate demand for the dollar.
At 0832 GMT commercial banks quoted the currency of east Africa's third largest economy at 2,510/2,515, unchanged from Thursday's close.
"Bank of Uganda has squeezed out some liquidity and that comes against the backdrop of weak corporate demand ... we think overall the shilling will have a bullish bias next week," said Ahmed Kalule, trader at Bank of Africa.
"The shilling is also getting support from some inflows that came in via this week's Treasury auction."
The Bank of Uganda on Friday mopped up 231 billion shillings using a seven-day repo at a weighted average rate of 11.5 percent.
This week the central bank also sold Treasury bills worth 165 billion Ugandan shillings and traders say there was healthy offshore appetite for the sale in which yields rose across all tenors.
The shilling is 0.5 percent stronger against the dollar so far this year, after steadily pulling back from sharp losses last week prompted by Uganda's enactment of a much criticised anti-gay bill into law.
The new law has prompted aid cut and suspension announcements by three European donors and the World Bank which has postponed disbursement of a $90 million.
Standard Chartered and KCB Uganda aid in the market reports they forecast the shilling to trade in the 2,500-2,530 ranges in coming days.
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