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RTRS:Uganda shilling slips vs dollar as banks cover positions
 
By Elias Biryabarema

KAMPALA Dec 9 (Reuters) - The Uganda shilling reversed a four-day gaining streak against the dollar on Friday undermined by interbank demand for the greenback, but traders still bet on a stronger local currency next week, expecting strong dollar inflows.

The currency of east Africa's third biggest economy has gained 15 percent since its Sep. 23 record low of 2,901 per dollar, buoyed by the central bank's tight monetary policy stance to beat back runaway inflation.

"Some banks started covering their short dollar positions which brought some moderate pressure to bear on the shilling," said Faisal Bukenya, head of market making at Barclays Bank.

"Overall the trading range, though, is tight and the recent bias toward a bullish shilling holds because corporate dollar demand remains muted."

At 1010 GMT commercial banks in Kampala quoted the shilling at 2,463/2,473, a notch weaker than Thursday's close of 2,458/2,468.

The shilling remains 5.2 percent down against the dollar in the year to date.

"We saw a small retreat for the shilling today but the general market tone is of a strengthening shilling through next week," said Denis Mashanyu, a trader at Standard Chartered Bank.

"We generally have the same market conditions of a slump in corporate demand as the year draws to a close and significant (dollar) inflows from Ugandans coming from abroad for holidays."

Source