The Ugandan shilling was stable on Wednesday in quiet trade but dealers anticipated the local currency would strengthen on possible hard currency inflows from investors seeking government debt. At 0741 GMT commercial banks quoted the shilling at 2,755/2,765, unchanged from Tuesday.
A market note from KCB Uganda said the Treasury auction due later on Wednesday was "likely to attract foreign exchange inflows hence strengthening the shilling." A total of 165 billion shillings ($59.76 million) worth of debt of 91-, 182-, and 364-day tenors were up for sale.
Faisal Bukenya, head of market making at Barclays Bank said the auction would also soak up some excess liquidity as buyers convert hard currency to shilling to buy Treasury bills. The shilling is however still vulnerable and may weaken towards the end of the month, Bukenya said. "In the very last days we are anticipating strong interbank demand so some depreciation pressure may come on the shilling," Bukenya said. Traders expect some of the banks will by buying dollars as they seek to square positions ahead of year end.
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