Ugandan shilling weakens on dividend flows, debt auction may help

By Elias Biryabarema

KAMPALA, March 24 (Reuters) - The Ugandan shilling UGX= weakened on Monday as foreign-owned commercial banks stocked up greenbacks in preparation to make dividend payments abroad, but a scheduled Treasury auction this week was seen limiting the local currency's losses.

At 1127 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,570/2,580, weaker than Friday's close of 2,555/2,565.

"We've had a lot of (dollar) appetite from banks which I think is being driven by preparations for dividend payments," said Ali Abbas, trader at Crane Bank.

Money market analysts say the local currency's medium-term outlook is weak, undermined by concerns over the potential economic impact of aid cuts by western donors.

A total of about $120 million in grants and loans has been withheld or cut by western donors protesting Uganda's enactment of a harsh new anti-gay law.

Aid is an important source of foreign exchange inflows for Uganda which has a weak export base.

"The shilling could... get some respite this week if offshore participation in this week's treasury bonds auction is big," said a market note from KCB Uganda.

Bank of Uganda is due to sell a total of 180 billion shillings ($70 million) worth of new two and re-opened five-year Treasury bonds.

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

All Uganda Bonds............. 0#UGTSY=

Uganda T-Bills.............. 0#UGTSYS=