KAMPALA (Reuters) - The Ugandan shilling edged up against the dollar on Monday due to lower demand for the greenback and traders expected it to weaken in the medium to long term as a monetary policy easing cycle makes locally-issued debt less attractive. At 0924 GMT, commercial banks quoted the currency of east Africa's third largest economy at 2,478/2,488, slightly up from Friday's close of 2,483/2,493. "We are not seeing any serious demand coming through particularly from the corporate sector and that's keeping the shilling supported for now," said Christopher Makombe, trader at Standard Chartered Bank in Nairobi. The shilling could however come under pressure from the dollar in the weeks ahead after the central bank loosened its monetary policy for a third consecutive time, trimming 200 basis points off its policy rate to 17 percent last week. "CBR (Central Bank Rate) has been cut significantly which points us to a weaker shilling in the medium to long term," said Dickson Musoni, trader at KCB Uganda. Market participants said the easing cycle will cause a decline in yields on government securities, bringing additional pressure to bear on the local currency as offshore investor appetite tails off. Like other frontier markets, the coffee-growing nation of 33 million people has seen hard currency inflows into its debt market become an important source of support for its currency in recent years, as foreign investors chase high yielding debt.

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