At 0810 GMT commercial banks in Kampala quoted the local currency at 2,832/2,842, a little weaker than Thursday's close of 2,837/2,847.

"Companies are really operating in harsh economic conditions, consumer demand is declining," said Dickson Musoni, Treasury sales manager at KCB Uganda.

"So they are probably slowing down production and that is affecting their demand for dollars."

Uganda's consumers are grappling with the country's highest inflation since 1993 at 28.3 percent in September, prompting the central bank (BoU) to sharply raise interest rates to 20 percent last month to try to curb private sector credit growth.

The Uganda shilling has in recent days been recovering from its Sept. 23 record low of 2,901, helped by slowing demand for the American currency and BoU's tight monetary policy stance.

"Next week corporates will be buying dollars to pay for November's input shipments and that demand is expected to push the shilling back a little," said a trader with a leading commercial bank.