KAMPALA: The Ugandan shilling lost ground on Tuesday, dropping as much as 0.7 percent as commercial banks bought dollars in anticipation of post-holiday demand from importers.
At 0823 GMT, commercial banks quoted the shilling at 2,810/2,820, weaker than Monday's close of 2,795/2,805.
"Banks are taking up huge positions... they expect a jump in demand from corporate (companies) as they come back from holidays," said Faisal Bukenya, head of market making at Barclays Bank.
The local currency started the year on a weaker footing, extending the losses from the second half of 2014. The shilling ended last year 9 percent weaker against the dollar.
Traders said the shilling is also being weighed down by the strength of the greenback and scanty inflows after the central bank cancelled a scheduled Treasury bond auction on Dec. 31.
Offshore investors in local debt are an important source of hard currency for the east African nation.
One trader with a leading commercial bank said there was potential for the central bank to sell dollars and limit the shilling's losses to prevent inflationary pressure.
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