At 1210 GMT commercial banks in Kampala quoted the currency of east Africa's third largest economy at 2,473/2,483, a touch weaker than Thursday's close of 2,470/2,480.

"The shilling has been held in place by tight liquidity but we're seeing demand for dollars start to pick up ... maybe the rate cut is starting to impact the real economy," said Ahmed Kalule, trader at Bank of Africa.

"Also with coffee exports declining we don't expect a lot of dollar inflows so next week we see the shilling depreciating as surging demand weights against low supplies."

State-run Uganda coffee development authority (UCDA) said the east African country's exports of the commodity tumbled to 275,057 60-Kg bags in June from 370,924 bags a year ago after heavy rains disrupted bean drying and transportation.

The central Bank of Uganda cut its Central Bank Rate (CBR) for July to 19 percent from last month's 20 percent, adding real output in the east African country was still below potential.

"Next week and going forward should see a significant boost in dollar purchases from firms in manufacturing and energy sectors," said a trader from a leading commercial bank.

"That will pressure the shilling upwards (weaker) and could see us slip past the key psychological barrier of 2,500."