Shilling in now familiar territory with another record low

What the report says

Uganda’s shilling weakened to another record low against the U.S. dollar on Friday, according to market data cited by Uganda Business News. The currency closed at Shs4,405.75 after trading within a range of Shs4,282.76 to Shs4,405.75 during the session. That marked a further drop from Thursday’s close of Shs4,229.29 on the same series.

The report said the move came one day after the Bank of Uganda returned to the foreign-exchange market and told commercial banks it was selling dollars, although it did not disclose how much foreign currency it offered or sold. A trader quoted by Reuters said the intervention could ease some demand, but was unlikely to reverse the shilling’s downward trend. Reuters also attributed pressure on the currency to strong dollar demand from energy and merchandise importers.

Uganda Business News noted that the central bank had raised its benchmark rate by 225 basis points to 12% on 14 October, yet the shilling has continued to weaken since then. The article said Thursday’s intervention was the first public confirmation that the Bank of Uganda had resumed dollar sales after the rate increase. The exchange rate cited is a market indicator and may differ from commercial-bank quotes and the central bank’s reference rate.