The Uganda Shilling was on the back foot through the week [Sept. 17 to 21] closing on the weak note at 2520/30 from the 2500/10 a week earlier.

Denis Mashanyu, forex trader at Standard Chartered Bank said the market saw a sizeable demand for foreign currencies especially the US Dollars with very little supply as offshore investors continued to shy away from the debt market due low yields. Mashanyu said treasuries firmed in the midweek auction with a strong appetite from onshore players.

Analysts say the performance of the Uganda shilling in the near term will partly depend on the market conditions in foreign economies. They say while the risk of an extreme crisis in the Euro Zone seems to have receded for now, a continued rise in the Euro could be negative for the Euro Zone's economy and that is one reason to be cautious about the single currency's outlook.

Mashanyu said with further easing expected by the central bank, the shilling will continue to weaken though gradually. "Expected trading range is 2500-50 in the medium term," he said.