KAMPALA: The Ugandan shilling weakened on Monday, hurt by strong appetite for hard currency from firms in the telecoms and energy sectors and the local currency was expected to maintain a bearish bias this week.
At 0843 GMT commercial banks quoted shilling at 3,065/3,075, weaker than Friday's close of 3,052/3,062.
The shilling is 9.6 percent weaker against the dollar so far this year, with the latest wave of depreciation pushing it ever closer to its all-time record low of 3,116/3,126 hit in March.
"There's depreciation pressure piling on the shilling mainly from demand by energy and telecoms firms," said Faisal Bukenya, head of market making at Barclays Bank.
The shilling has been weakening since last week due to rising dollar buying by corporate firms.
Traders say the increased dollar demand has coincided with a squeeze in hard currency inflows spurred by conflicts in South Sudan and Burundi - key markets for Ugandan exports - and a tailing off of offshore demand for Uganda government debt.
Offshore interest for Ugandan debt is decreasing on the back of falling yields, according to market analysts.
Isaac Iga, chief dealer at Orient Bank, said some corporate firms were buying hard currency for dividend payments.
He said uncertainty ahead the 2015/16 budget reading expected early this month was also driving demand for hard currency and would likely keep the shilling on the back foot.
"When people don't know what's coming they feel safer when they have comfortable (dollar) positions," Iga said.
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