Uganda shilling stable

Tuesday July 12, 2011

KAMPALA, (Reuters) - Lower demand for dollars kept the Ugandan shilling flat for the third straight session on Tuesday but traders said it might weaken slightly in the days ahead.

Commercial banks in Kampala exchanged the shilling at 2,600/2,620 against the dollar at 0810 GMT, unchanged from Monday's closing level.

"Demand has eased off which has given the shilling energy to hold its ground against the dollar for now. I think the current level will sustain for the day," said Faisal Bukenya, head of market making at Barclays Bank Uganda.

The local currency slipped through a series of record lows and hit 2,710 against the dollar on June 30, dragged down by strong dollar demand from the oil sector and panic dollar buying, before a central bank dollar sale sparked a recovery.

The shilling's steep drop against the greenback last month provoked widespread anger among business people who said an expensive dollar was eroding their margins.

Traders shut their shops for two days last week, demanding the government should fix the exchange rate to curb their losses.