NAMUWAYA RAIMAH: Defending the Shilling Without Breaking the Economy

What the report says

Watchdog Uganda published an opinion piece arguing that the Uganda shilling’s recent depreciation has become a practical concern for households, traders, manufacturers and borrowers, as weaker currency conditions can raise the cost of imported goods, fuel and machinery. The article says the Bank of Uganda is trying to balance exchange-rate stability, inflation control and economic growth as the currency comes under pressure from a mix of global and domestic forces.

The commentary says the shilling fell from about Shs 3,604 per US dollar in March 2026 to roughly Shs 4,500 by late October 2026, and points to stronger US dollar conditions, higher oil and shipping costs, tourism fluctuations and demand for foreign currency from major projects, especially in the energy sector. It also notes that speculation can worsen pressure when businesses and individuals rush to buy dollars in anticipation of further depreciation.

According to the piece, the central bank raised its Central Bank Rate from 9.75% to 12% on October 14, 2026, and lifted the cash reserve requirement for commercial banks from 11% to 13.5%. The author says these steps can reduce liquidity and limit speculative demand, but may also make credit more expensive and slow investment and business activity.

The article argues that longer-term shilling stability will depend less on interest-rate defense alone and more on structural measures such as boosting exports, reducing import dependence, supporting manufacturing, attracting productive investment, strengthening tourism and improving regional trade. It concludes that policy coordination and clear communication will be important to avoid damaging growth while protecting purchasing power.