KAMPALA (Reuters) - The Uganda shilling was unchanged on Monday against the dollar amidst tepid market activity but traders said it was likely to strengthen ahead of a Treasury bill auction on Wednesday. At 0850 GMT commercial banks in Kampala quoted the local currency at Friday's close level of 2,675/2,685. Stanbic Bank Uganda forecast in a market report that the local currency was likely to oscillate between 2,640-2,690 in the course of the day. Traders said the 95 billion shilling paper was expected to spur an upswing in dollar inflows that might give a slight boost to the shilling. "We ... expect the shilling to self correct in the course of the week on the back of 95 billion shilling Treasury bill auction," said Lucas Ochieng, head of Treasury at Orient Bank. On August 2, the Bank of Uganda raised its benchmark central bank rate (CBR) to 14 percent for this month from 13 percent in July, signaling a possible rise in yields on government securities as it moves to reign in inflationary pressures. "Offshore interest in government paper is high with rising interest rates, so we really expect the shilling to gain some energy from the Wednesday auction," said another trader. Uganda's central bank sold an undisclosed amount of dollars on Thursday to buoy the shilling after heavy demand for dollars from the manufacturing sector saw it drop sharply toward its June 30 all-time record low of 2,710. One trader said the shilling could come under pressure. "It's a quiet and stable market now, nothing moving although the odds are still against the shilling since inflows remain scanty," said Faisal Bukenya, head of market making at Barclays Bank Uganda. The Uganda shilling has shed 14.6 percent of its value against the greenback in the 12 months to July this year.

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