A forex rate display at dfcu Kabale branch
The Bank of Uganda (BoU) has attributed the continued depreciation of the Uganda shilling against the US dollar to the ongoing conflict in the Middle East and fluctuations in global coffee prices.
A few months ago, the shilling was trading at around Shs3,740 per US dollar. However, a survey on Thursday, April 10, showed a sharp depreciation. At Pride Bank in Kabale Town, the dollar was buying at Shs3,840 and selling at Shs3,930. At DFCU Bank, the dollar was buying at Shs3,705 and selling at Shs4,035.
Speaking during a town hall meeting at White Horse Inn Hotel in Kabale District, Deo Sunday, an official from the Monetary Policy Department at BoU, said increased demand for the US dollar had contributed to the shilling’s depreciation, with the local currency now trading at Shs3,940 compared to Shs3,740 previously.
The meeting, held as part of BoU’s 60th anniversary activities, was aimed at increasing awareness of the economy, financial services, and opportunities for business and agricultural financing in the Kigezi sub-region.
Sunday noted that before the recent slide, the Uganda shilling had been among the best-performing currencies in Africa. He called on Ugandans to remain patient as the central bank responds to prevailing economic pressures.
He attributed the surge in dollar demand partly to the war involving the United States and Iran and the resulting global uncertainty. He explained that the uncertainty has prompted some investors and individuals to move savings to safe-haven currencies, with the US dollar benefiting from its status as a major global reserve currency.
Sunday also linked the depreciation to fluctuations in global coffee prices and adverse weather conditions, which have affected coffee production and export earnings.
He, however, said BoU has maintained credible monetary policy measures to manage liquidity and support the shilling, including increasing the Cash Reserve Requirement (CRR) for commercial banks from 9.5 percent to 11 percent.
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