Shilling breaches Shs4,000 with reserves nearly double their 2024 level

What the report says

Uganda’s shilling weakened past the Shs4,000-per-dollar mark for the first time on Monday, with the Bank of Uganda’s mid-rate closing at Shs4,023.57, up from Shs3,966.90 on Friday, according to Uganda Business News. The publication said the central bank does not intend to sell dollars to defend the currency, even as the shilling extends a run of losses.

The report said the currency has fallen about 10% against the U.S. dollar this year, making it one of Africa’s weaker performers in 2026. It attributed the pressure to dollar demand from importers in sectors such as energy, manufacturing and telecoms, along with offshore investors reducing or hedging Ugandan debt exposure. Bank of Uganda research chief Adam Mugume also linked some forward dollar buying to uncertainty around Middle East tensions.

Instead of direct foreign-exchange intervention, the central bank has recently raised the cash reserve requirement for commercial banks to 13.5% from 11%, a move intended to improve liquidity management and, according to Absa, help stabilize the shilling by draining cash from the market. Governor Michael Atingi-Ego has said the bank has the tools to stabilize the exchange rate.

Uganda Business News also reported that gross reserves reached $6.52 billion in August, nearly double the February 2024 level and enough to cover 3.6 months of imports excluding oil-project imports. The stronger reserve position provides more room for policy support, but the report noted that the bank does not disclose its dollar market activity, leaving the extent of any support unclear.