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Uganda shilling stable vs dollar, focus on T-bill auction

Wednesday, 3 Oct 2012 | 6:40 AM ET

NAIROBI, Oct 3 (Reuters) - The Ugandan shilling was steady against the dollar on Wednesday after policymakers slashed official rates by 200 basis points and traders said foreign investor appetite for a Treasury bill auction due later in the session would determine direction.

Uganda's central bank lowered its key lending rate

for the fifth straight month on Tuesday to 13.0 percent from 15.0 percent, though the move was largely expected by the market, traders said.

At 0840, commercial banks posted the shilling at 2,560/2,570 per dollar, barely changed from Tuesday's close of 2,555/2,565.

The focus is on the sale of 95 billion shillings ($37 million) worth of Treasury bills during the session. "The auction will give us a clear direction of the shilling," said Seif Kiwanuka, head of treasury at Diamond Trust Bank.

Official interest rates have fallen sharply from highs that had brought foreign investors flooding into Uganda's debt market in search of high yields. The latest rate cut, which analysts said was nearing the end of the easing cycle, could further reduce offshore investor appetite and spark mass outflows.

The shilling was under pressure for several days before the rate decision and weakened slightly after the cut was announced.

"We saw some profit taking from banks after the rate cut at below 2,570," said Faisal Bukenya, head of market making at Barclays Bank.

UGX Spot Rate.....

Ugandan Shilling Money Guide....

Calculated Cross Rates..........

Deposits.....................

Deposits & Forwards.............

Uganda Equities Guide.......

Uganda All Share Index........

Shilling background .....

Ugandan Debt Guide............

All Uganda Bonds.............

Uganda T-Bills..............

Uganda Benchmark.............

Central Bank ................

Ugandan Contributor Index....

Uganda Coffee Prices....... ($1 = 2565.0000 Ugandan shillings)

(Reporting by Beatrice Gachenge; Editing by Drazen Jorgic/Ruth Pitchford)

((nairobi.newsroom@reuters.com)(Tel: +254202224717))

Keywords: UGANDA MARKETS/