Business 24 March 2026 Daily Monitor (Uganda)
Ugandan Shilling Weakens Amid Global Tensions, Boosting Dollar Holders
The Ugandan shilling has depreciated against the US dollar due to heightened demand from energy importers hedging against Iran-related oil instability and geopolitical risks, alongside increased manufacturing imports and dividend payouts. Recent inflows provided temporary relief, strengthening the shilling slightly on March 24. Source: https://www.monitor.co.ug/uganda/news/national/-dollar-holders-having-their-moment--5402006
Dollar holders in Uganda are enjoying a favorable period as the local shilling weakens under pressure from global uncertainties. Energy retailers, responding to tensions around Iran—a major oil producer—are adding premiums to fuel prices and converting shillings to dollars to secure supplies.
Manufacturers are accelerating imports while access remains stable, and listed companies are stockpiling dollars for upcoming dividend payments to foreign investors. These combined factors have driven demand, pushing the shilling to Shs 3,775-3,785 per dollar by last week’s close, about 4% weaker year-to-date.
On March 24, the shilling rebounded to Shs 3,740-3,750, supported by inflows from offshore investors, exporters, and local banks, according to Richard Nsubuga, Acting Head of Trading. This shift highlights the market’s volatility, with spreads of around Shs 10 enabling liquidity while absorbing imbalances.
Catherine Kijjagulwe, Head of Markets at Absa Uganda, notes that these spreads facilitate trading by covering dealers’ risks. The shilling’s flexibility acts as a shock absorber for external pressures like regional elections and oil shocks, avoiding domestic shortages.
Economist Christopher Legilisho from Stanbic Kenya emphasizes that such adjustments prevent internal economic disruptions. The Bank of Uganda’s hands-off approach, using repos and Treasuries sparingly, maintains policy credibility and reserves.
For exporters, the weaker shilling means better returns, while importers face higher but predictable costs. Analysts view this as rational market adjustment rather than distress.
Source: Daily Monitor (Uganda)