The Ugandan shilling appreciated against the US dollar closing the week on Dec. 14 at 2660/70 from 2690/00, a week earlier, according to Denis Mashanyu, forex trader at Standard Chartered Bank.

"With policy makers having maintained their stance to have low interest rates, investors rushed again into the debt market leading to decent offers in the foreign exchange market," Mashanyu said.

He said the renewed investor interest is short-lived and will see the shilling drop further in the coming weeks after the festive season.

Analysts have predicted the shilling might depreciate further in the months ahead following announcements about aid cuts by donors to Uganda after officials in the office of the Prime Minister caused financial loss worth billions of shillings.

"Next week we expect the shilling to remain stable in the region of 2650-80 trading on thin liquidity," Mashanyu said.