Ugandan shilling stable

The Ugandan shilling was unchanged against the dollar on Friday, with a central bank move to tighten liquidity conditions helping it consolidate its recent gains against the greenback.

At 0905 GMT commercial banks quoted the currency of the prospective crude oil producer at 2,575/2,585 per dollar, the same as Thursday's close.

"The Bank of Uganda (BoU) has just done a repo which again tightened local currency liquidity after some slight easing up mid-week," said Ali Abbas, a trader at Crane Bank.

"So with shillings a bit in scarcity now we're anticipating it will probably remain anchored around its current position with some possible downward movement."

Analysts also say the Ugandan currency, which endured enormous pressure last week as offshore investors cut their positions, is likely to firm up as yields on Ugandan debt edge up.

Rates across the maturity curve of Uganda's Treasury bills rose at an auction this week, breaking a downward trend that prevailed since early this year.

The weighted average yield on the benchmark 91-day paper rose a touch to 9.69 percent from 9.67 percent at the previous auction on Oct. 4 and compared to a 2012 high of 23.4 percent in January.

Uganda partly relies on dollar inflows from offshore investors to shore up its currency and the months-long drop in yields had significantly eroded their appetite.

"The shilling is stable also partly because corporate (dollar) demand is very muted," said Ahmed Kalule, trader at Bank of Africa.

"In the short-term there doesn't appear to be appetite for the dollar above 2,600 so the shilling will probably swing in 2,560-2,600 range next week." Reuters