KAMPALA - The Ugandan shilling eased a touch on Monday as banks covered short dollar positions in the interbank market, but traders said the immediate outlook was broadly steady.
Commercial banks quoted the currency of Africa's leading coffee exporter at 2,573/2583, a touch weaker than Friday's close of 2,570/2,580.
"Some players in the interbank are buying dollars to cover short positions, thus the slight weakening of the shilling," said Nicholas Mutatira, treasury dealing manager at Centenary Bank, while adding this demand for dollars was likely to be modest.
"The outlook for the shilling favours stability around the current level," he said.
The currency has broadly held in a range of 2,570-2,585 this year as the central bank's conservative monetary policy has stifled consumer demand for imports.
"The shilling will remain anchored around the 2,570-2,585 range," said Faisal Bukenya, head of market making at Barclays Bank. "As long as there's no demand from importers we probably won't see big moves for the shilling on either side."
However, the shilling could face some pressure from the middle of next month as importers seek to stock up to prepare for demand from shoppers before the end-of-year holidays.
Although inflation has been tame, running at about 5 percent in the year to July, the central bank has cut its key lending rate only once this year. It held its key rate at 11 percent this month, a level traders says stifles credit flow and consumer spending.