Bank of Uganda on why the shilling is in a free-fall

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In brief statement issued on Wednesday, the central bank Deputy Governor, Prof Kasekende revealed that the bank has an adequate reserve buffer equivalent to 4.9 months of imports of goods and services as at April 2018
Bank of Uganda says the weakening of the Uganda shilling against the US dollar is driven by global strengthening of the dollar and the unfavourable balance of payments due to strong demand for imports especially from manufacturing, energy and trade sectors

‘‘The Bank is not indifferent to volatility in the foreign exchange market especially when it is unduly driven by speculative trading. Bank of Uganda stands ready to intervene in the forex market whenever we deem the currency movements to be disjointed with economic fundamentals.’’ He said.
He added: Bank of Uganda is committed to a market determined exchange rate that supports the economy’s adjustment to changes to the balance of payments.

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Reactions from Ugandans
Muhereza Kyamutetera‏ @StKyamutetera: Good explanations, but it does not take away the pain. I am sure other serious countries elsewhere are doing something about it, beyond this good story-telling
Rtn. Amanya Duncan‏ @RtnAmanya : What shall we ever get right and be proud of as a nation? Currency strength?, Taxes? Fuel? Salary? Employment? Environment? Security?….name it, Even paraffin/kerosene is not affordable in villages,. =
Nkugwa Julius‏ @JuliusNkugwa : we always have the best explanations for everything. It’s time for these statements to end with “and we are taking … steps to achieve…”

Emma Ssembatya‏ @Ganda_stone : About the #BUBU campaign, what strategies are there in place to boost the local industries and protect them from external competition as a way of boosting the value of the UGX against the USD and trying to balance our BOP deficits?
Wako Joel 🇺🇬‏ @wakojoel : Probably we need a new currency the way we had change of currency in 1987
David N. Wozei‏ @davidwozei : Have you considered that another reason may be poor control over Forex business done especially by Commercial Banks, Bureaus for both inflows and outflows? Has BoU also considered fixing a rate at say 3800shs like they do in Dubai, UAE and you have only marginal in differences?

Second example I can give is Kenya. Between 2008 and 2018, KES went from 75 to now 101 against USD (25%). Their first scare was 2011 when it hit 90 KES. We have been heading from 1800 to more than double that and even lost a further 30% in the last 6months (120%) to now 3850 UGX.

read:Bank of Uganda intervenes to save the sinking shilling

JacqueN I‏ @Jacque63733374 : Stop all local payments in USD. And encourage using UGX. How can people pay rent in USD when they earn in UGX. You are the problem- BOU. Do something
Daaki‏ @sdaakii : Sometimes exchange rate volatility will be harsh on domestic consumers. Kindly consider Short-term Pegging of the Ugx. Against the Dollar to protect domestic consumers from the perils of spillover effects and such market volatility.

read: Uganda shilling weakens to an all-time low, now selling at 3900 to a dollar

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