KAMPALA: The Ugandan shilling weakened on Tuesday due to end-month dollar demand from manufacturing and energy importers and traders said the central bank could intervene by selling dollars to help the shilling.
At 1000 GMT commercial banks quoted the shilling at a five-day low last seen on Oct. 22 of 2,708/2,718, weaker than Monday's close of 2,702/2,712.
Prior to its decline this past week, the shilling last traded weaker than 2,700 to the dollar in January 2013.
"Pressure on the shilling is rising because we have strong and consistent demand from manufacturing and energy firms," said Ahmed Kalule, trader at Bank of Africa.
"My thinking is we'll see more depreciation unless Bank of Uganda (central bank) comes in on the supply side."
The local currency has been under pressure largely on account of strong demand from importers who are making payments for their monthly imports and others shipping in goods in advance for year-end holiday shoppers.
The shilling has so far this year lost nearly 7 percent of its value against the greenback.
Kalule said the local currency would have weakened further, but some of the pressure was mitigated by expectations of some hard currency inflows from investors interested in bidding for Treasury bills at auction this week.
A total of 145 billion shillings ($53.55 million) worth of debt is up for sale at the auction on Wednesday.
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