The Uganda Shilling has continued to weaken against the US Dollar, with the official Bank of Uganda (BoU) exchange rate reaching a new high on Tuesday.
The dollar was quoted at Shs3,919 on the official market, while commercial banks were selling it for as much as Shs4,040.
The sharp depreciation in recent months has raised concern among businesses and members of the public, with questions emerging over the Central Bank’s efforts to support the local currency.
Since March, the Shilling has fallen from about Shs3,604 to the dollar to Shs3,919, representing a loss of Shs315 in value against the US currency.
However, the Bank of Uganda says the depreciation does not currently warrant direct intervention because the movement has remained smooth rather than volatile.
BoU Governor Michael Atingi-Ego said the Central Bank intervenes in the foreign exchange market primarily to smooth excessive volatility, rather than to prevent every episode of currency depreciation.
The latest weakening of the Shilling is occurring against a backdrop of rising global oil prices and reduced dollar inflows from some of Uganda’s traditional sources of foreign exchange.
The continued depreciation is likely to increase pressure on businesses and consumers, particularly those dependent on imported goods and services, as the cost of purchasing dollars rises.