KAMPALA - The Ugandan shilling strengthened on Tuesday amid weak greenback demand from corporates and expectations of hefty inflows from foreign investors at a debt auction on Wednesday.
Commercial banks in Kampala quoted the currency of east Africa's third-largest economy at 2,577/2,587, a touch stronger than Monday's close of 2,582/2,592.
"Corporates are not in the market and we think it's because they're saving their shillings to meet tax obligations as the mid-month deadline nears," said Ahmed Kalule, trader at Bank of Africa.
The shilling is seen trading on a firm footing in the weeks ahead, helped by a tight policy stance, though some money market analysts say the local currency could come under pressure toward the end of this month from importers.
"Also there's a bond auction tomorrow and bonds tend to attract more offshore interest than Treasury bills so there's expectations of good dollar flows," Kalule said.
Bank of Uganda is on Wednesday due to sell 145 billion shillings ($56.16 million) worth of 2 and 5-year Treasury bonds. Some traders anticipate a rise in yields after the central bank last month hiked its policy rate to 12 percent, from 11 percent, to rein in inflation, which topped 7 percent in August. UGX Spot Rate.....