KAMPALA: The Ugandan shilling was stronger on Monday, helped by a central bank mop-up of excess liquidity and mid-month corporate tax payments that depressed demand for dollars.
Commercial banks quoted the shilling at 2,730/2,740 by 1142 GMT, stronger than Friday's close of 2,740/2,750.
"We had a mop-up of excess liquidity by the central bank which helped push up the (local) unit," said Sage Daniel Muganza, trader at Centenary Bank.
"We also think because most corporates are settling their mid-month tax payments it has helped depress demand for dollars."
The local currency, which is 7.7 percent weaker against the greenback so far this year, came under pressure last week, hitting a three-year low, largely due to dollar demand from manufacturing, energy and telecom companies.
Traders say the central bank, reluctant to directly sell dollars to support the shilling, is expected to rely on aggressive draining of excess liquidity from the interbank market to try to prop up the currency.
It was unclear how many shillings were removed from the market on Monday, although last week more than 500 billion shillings ($183 million) was removed.
Ali Abbas, a trader at Crane Bank, said the market was receiving some inflows from coffee exporters and that the local currency was likely to trade in the 2,720-2,740 range this week.
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