THE shilling remained flat versus the US currency on Tuesday, but was expected to appreciate mildly in the coming days, dealers said.
Leading commercial banks posted the local unit at 1,868/70 against the dollar from Mondayâ€™s close of 1,870/75.
â€œItâ€™s a bit flat today (Tuesday). Thereâ€™s not much demand,â€ said one forex dealer at a commercial bank.
The Ugandan unit has firmed since June/July after falling nearly 40% from late last year to early 2009 on the back of foreign portfolio outflows from Ugandaâ€™s markets.
Dealers said they expected the shilling to remain little changed in Tuesdayâ€™s trading, but some inflows later this week might support the local currency.
â€œGoing forward in the week, weâ€™ll see a marginal appreciation of the shilling (on donor flows and remittances from Ugandans abroad),â€ said another dealer, who expected it to trade in the 1,860/75 range.
Denis Mushabe, the Standard Chartered Bank foreign exchange trader, explained that the shilling was flat against the dollar during last week, trading in a very narrow range of 1872/78 with minimal activity in the markets because Friday was a public holiday.
â€œThe market saw a sizeable demand from corporates, mainly the energy sector which was well matched by flows leaving the pair unchanged.
â€œInterest rates continued to come off with cash markets still very liquid and treasuries still holding steady,â€ Mushabe said.
This week, he predicted, the market was expected to watch closely the developments in Dubai with delayed payments or default by a leading property development firm; Dubai World likely to create a â€œcorrectionâ€ in the emerging markets. â€œMinus that, the shilling is expected to remain steady against the greenback, trading at the range of 1860/80,â€ he said.
The shilling traded below the 1,900-level per dollar in October, touching the 1,893-mark, the highest this year, boosted by the offshore interest in government securities and the low demand for the US currency.
The shilling last traded around these levels in October last year, prompting the central bank to intervene.
Shilling stays flat against US dollar