Ugandan shilling stable, seen gaining on tax payments

By Elias Biryabarema KAMPALA (Reuters) - The Ugandan shilling was unchanged in slow trading on Tuesday but market players said the local currency was likely to edge up in the coming days, helped by a slowdown in dollar demand. At 1112 GMT commercial banks in Kampala quoted the currency of east Africa's third-largest economy at 2,517/2,522, unchanged from Monday's close. Traders said the shilling could recover on slack dollar buying as corporates use up their shillings for mid-month tax payments. "I expect demand for dollars to be very minimal as companies effect their mid-month tax payments so the shilling's bias is on the stronger side," said Peter Mboowa, trader at KCB Uganda. The shilling has been trading stable for much of this year, largely guided by a conservative monetary policy which has kept credit flow sluggish and consumer spending weak. Lacklustre consumer spending often generates support for the local currency as it means importers are not exerting that much demand for the dollar. "The outlook favours a strong shilling since we hope to have good inflows from offshore investors into Wednesday's auction," said Faisal Bukenya, trader at Barclays Bank. The Bank of Uganda (BoU) is expected to sell 145 billion Ugandan shillings worth of Treasury bills of all maturities on Wednesday.