Ahmed Kalule, a trader at Bank of Africa, said the central bank's move to mop up liquidity had reduced demand in the market for a globally weaker dollar, propping up the shilling.
The Bank of Uganda had been injecting liquidity into the market using reverse repos, which weakened the shilling in recent sessions. A tight monetary policy stance by the central bank this year has kept private sector credit expensive, limiting consumer spending and helping the local currency strengthen this year.