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By Elias Biryabarema
NAIROBI, Dec 17 (Reuters) - Uganda’s central bank on Wednesday sold dollars to relieve pressure on the shilling created by demand for the U.S. currency, although traders said the outlook was still bearish.
Commercial banks quoted the shilling at 2,770/2,780 at 0827 GMT, the same as Tuesday’s close, as it recovered from an early morning low of 2,785/2,795 that triggered Bank of Uganda’s intervention.
The central bank announced its intervention on Thomson Reuters terminals but did not disclose how much hard currency it was pumping into the market.
“Pressure was coming from a continuation of the strong demand from commercial banks that started yesterday,” said Faisal Bukenya, head of market making at Barclays Bank. “There’s also still strong corporate demand out there, which will keep the shilling’s tone bearish.”
Some market players have said the shilling, down 9 percent against the dollar this year, was likely to weaken past the key psychological level of 2,800 before markets break for Christmas.
Although the shilling largely traded on a stable footing in the first half of 2014, it has come under escalating pressure in recent months as demand from importers soars.
The global strength of the dollar has helped sap market confidence in the shilling. (Additional reporting by George Obulutsa; Editing by Edith Honan, Larry King)