KAMPALA - The Ugandan shilling firmed on Monday, helped by proceeds from agricultural commodity exports and charities but was seen trading in a stable range this week, with the central bank expected to leave its policy rate unchanged this month.
Commercial banks quoted the currency of east Africa's third-largest economy at 2,582/2,592 a touch stronger than Friday's close of 2,587/2,597.
"Inflows from exporters of agricultural commodities and NGOs (non-governmental organisations) have come through and pushed
the shilling up (stronger)," said a trader at a leading commercial bank.
Uganda's biggest agricultural commodity export is coffee although the country also produces tea, tobacco and cocoa.
"The shilling is expected to trade in a narrow range if the central bank maintains its key rate as expected," said a market note from Centenary Bank.
Bank of Uganda is due to announce its benchmark Central Bank Rate (CBR) for September on Tuesday, and market players broadly expect the bank to keep it at August's 11 percent despite a surge in inflation.
Analysts say although year-on-year inflation jumped last month to 7.3 percent from July's 5.1 percent, a hike of the bank's lending could further push up already high borrowing costs and slowing credit growth and weaken economic recovery.
The shilling, which has largely oscillated in a stable range of 2,560-2,600 for much this year, is seen coming under pressure later in the month from goods importers demanding dollars.