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UPDATE 1-Uganda cbank sells dollars again to steady shilling

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(Recasts, adds trader comments)

By Elias Biryabarema

KAMPALA, Oct 11 (Reuters) - Uganda's central bank intervenedin the currency market for the third time in two days onThursday, but the move had little impact on the shilling

which is expected to remain vulnerable.

The bank was in the market twice on Wednesday to prop up theshilling, selling dollars to steady the local currency, buttraders said they expected pressure on the shilling to continueover coming months as importers buy greenbacks.

A decline in Ugandan government debt yields has seenoff-shore investors exiting the local currency, adding pressureon the shilling.

"The central bank intervened on the selling side but they'vevirtually had no impact. The shilling was at 2605/2615 when theyintervened and they left it at 2600/2610," said Ahmed Kalule,trader at Bank of Africa.

"And worse, the local corporates are also joining the party(and buying dollars)," Kalule said.

The shilling has been weakening gradually since the centralbank extended its monetary policy easing cycle this month bylopping 200 basis points off its key lending rate to 13 percent.

Analysts fear continued loosening will severely depressyields on Ugandan debt, making it unattractive to offshoreinvestors who help support the local currency.

In the medium term the policy easing is also expected totrigger a surge in dollar from investors as they access cheapcredit and import more raw materials to boost production.

UGX Spot Rate..... UGX=

Ugandan Shilling Money Guide.... UGX/1

Calculated Cross Rates.......... UGXX=

Deposits..................... UGXDEPO=

Deposits & Forwards............. UGXF=

Uganda Equities Guide....... UG/EQUITY

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

Shilling background ..... UGX/BKGDINFO

Ugandan Debt Guide............ UG/DEBT

All Uganda Bonds............. 0#UGTSY=

Uganda T-Bills.............. 0#UGTSYS=

Uganda Benchmark............. 0#UGBMK=

Central Bank ................ BOUGINDEX

Ugandan Contributor Index.... UG/CONT1

Uganda Coffee Prices....... COFFEE/UG01

(Writing by Drazen Jorgic; Editing by James Macharia andPatrick Graham)

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

Keywords: UGANDA CURRENCY/

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