A surge in inflows from offshore funds ahead of the yesterday’s Treasury Bills auction helped the Ugandan shilling gain some ground against the dollar.
Commercial banks quoted the local currency at 2,785/2,795, slightly stronger than Tuesday’s close of 2,790/2,800.
"Significant offshore funds have come through today (yesterday). These investors are converting the dollars to invest in the Treasury Bills. This gave the shilling a boost," said Walter Mananu, a dealer at Bank of Africa.
The Bank of Uganda was set to auction 91, 182, and 364-day Treasury Bills worth sh90b ($32.3m) yesterday afternoon.
Analysts expected yields to rise on the back of the bank’s tight monetary policy.
"The inflows chasing after government securities are good, but they will only help keep the shilling averagely stable, you will not see it recover dramatically," Mananu said.
The shilling has lost 19% year-to-date, hitting an all-time low of 2,828.25 against the dollar on August 31.