Denis Mashanyu, a forex trader at Standard Chartered Bank Limited said the Ugandan shilling posted further gains closing at 2645/55 on Dec 21 from 2660/70, the previous week close.

He said in a statement that the market saw the offered tone maintained with corporate demand subdued as major players scaled down ahead of the festivities. "Yields on treasuries remained unchanged with muted interest from investors with cash markets liquid," he said, adding, we expect the slowdown in activity to hold into next week with the pair trading in a narrow range of 2640-65.

Treasuries are expected to firm in the last primary auction of the year on Dec 27 with sizeable participation from onshore investors.

Other experts shared a different view. "The market is pretty flat because (dollar) demand is not there but going into 2013 we anticipate some small depreciation for the shilling," Shahzad Kamaluddin, trader at Crane Bank was quoted by Reuters on Dec. 21.

Shahzad said that considering the negative factors like a growing current account deficit, aid cuts and the central bank's loose policy stance I reckon the shilling will weaken when business resumes.