Ugandan shilling firms slightly, boosted by tight liquidity

KAMPALA (Reuters) - The Ugandan shilling rose slightly on Monday, boosted by tight shilling liquidity after the central bank drained some 400 billion shillings from the market last week. At 0948 GMT commercial banks in Kampala quoted the unit at 2,565/2,570, a touch weaker than Friday's close of 2,568/2,573. "The market is tight on shillings," said Faisal Bukenya, head of market making at Barclays Bank. "However, we have some (debt) maturities tomorrow so we expect the shilling scarcity to ease up and that could stop the upward climb." The shilling has mostly traded between 2,550-2,600 this year and is now expected to be mostly stable in the short term, helped by a tightening of monetary policy. Bank of Uganda hiked its key lending rate from 11 to 12 percent this month to counter surging prices, a move seen as set to keep borrowing costs high and consumer spending weak. The shilling was supported at 2,565 and finding resistance at 2,575, said Nicholas Mutatira, a trader at Centenary Bank.