Ugandan shilling extends gains on debt auction, interbank selling

By Elias Biryabarema

KAMPALA, Feb 18 (Reuters) - The Ugandan shilling UGX= strengthened on Tuesday, boosted by expectations of hard currency inflows from offshore investors and sales of dollars in the interbank market.

At 0913 GMT, commercial banks quoted the currency of east Africa's third-largest economy at 2,453/2,458, stronger than Monday's close of 2,458/2,463.

"There's some pretty wide anticipation of healthy demand from offshore people for the Ugandan debt at the coming auction," said Ahmed Kalule, a trader at Bank of Africa. "That positive sentiment is boosting the shilling and also some players in the interbank are selling (dollars) speculatively in anticipation of those inflows."

Bank of Uganda, the central bank, is due to auction on Feb. 19 a total of 165 billion shillings ($67.11 million)worth of Treasury bills of all maturities.

Strong offshore appetite for Ugandan debt has partly kept the shilling firm this year, allowing it to gain 2.8 percent against the greenback, since investors have to convert their hard currency holdings to buy the debt.

Frequent liquidity mop-ups by the central bank, which have kept the supply of shillings on a tight leash, have also helped.

Sage Daniel Muganza, a trader at Centenary Bank, said demand for the dollar from big companies is very low.

"The shillings' gaining momentum is also being partly fuelled by that (weak demand)," he said.

UGX Spot Rate..... UGX=

Ugandan Shilling Money Guide.... UGX/1

Calculated Cross Rates.......... UGXX=

Deposits..................... UGXDEPO=

Deposits & Forwards............. UGXF=

Uganda Equities Guide....... UG/EQUITY

Uganda All Share Index........ .ALSIUG

Shilling background ..... UGX/BKGDINFO

Ugandan Debt Guide............ UG/DEBT