economy 16 March 2026 Daily Monitor (Uganda)
Uganda Shilling Faces Pressure from Middle East Tensions: Central Bank Responds
The Uganda shilling has depreciated significantly against the US dollar due to escalating Middle East conflicts driving up oil prices and global uncertainty. Bank of Uganda is actively managing liquidity to stabilize the currency amid rising import costs and debt servicing challenges. Source: https://www.monitor.co.ug/uganda/news/national/what-next-as-uganda-shilling-weakens-amid-middle-east-tensions--5392790
The Uganda shilling has slid against the US dollar, trading at around Shs3,768/3,778 per dollar on Monday, marking a nearly Shs200 weakening over the past two weeks. This depreciation stems from heightened global tensions between the US-Israel and Iran, fueling risk aversion and surging oil prices.
Analysts attribute the shilling’s decline primarily to external factors rather than local issues. As a net importer, Uganda now grapples with elevated costs for fuel and essentials, alongside increased expenses for servicing dollar-denominated external debt.
Money market expert Stephen Kaboyo of Alpha Capital highlights that prolonged Middle East unrest could undermine macroeconomic stability. Recent data shows the dollar strengthening by 0.205 percent weekly against the shilling.
Bank of Uganda officials are vigilantly tracking developments. Dr. Adam Mugume, the bank’s research director, revealed measures to curb excess liquidity, including hikes in the Cash Reserve Ratio (CRR) to soak up surplus shillings.
“By making Uganda shillings scarcer, we aim to ease dollar demand without crippling economic activity,” Dr. Mugume stated. The central bank is also deploying government securities, with a bond auction this week set to absorb Shs1.4 trillion in liquidity.
While exporters in coffee, tea, and flowers may see short-term gains from favorable exchange rates, Dr. Mugume warns these benefits could vanish if the shilling rebounds.
Source: Daily Monitor (Uganda)