Uganda’s shilling has slipped to its weakest level since at least 1993, reaching 4,143 per dollar as foreign investors retreat from local-currency bonds amid rising US yields. The currency has fallen more than 10% since August 25, marking the steepest decline among 144 currencies tracked by Bloomberg. Analysts cite both global and domestic pressures, including higher energy costs from Middle-East supply disruptions and strong corporate demand for dollars.
Last week’s debt auction saw minimal foreign participation, with demand coming mainly from local banks and pension funds. Citigroup estimates $200 million has exited Uganda’s markets over the past two weeks, while JPMorgan values the local bond market at $9.4 billion. Authorities are unlikely to intervene, following President Yoweri Museveni’s directive to the central bank not to sell dollars, which he criticized as squandering reserves.
Uganda’s $6 billion in foreign-exchange reserves covers about 2.7 months of imports, contrasting with peers like Ethiopia and Zambia that are using reserves to defend their currencies. The next key level for the shilling is 4,150 per dollar, suggesting further weakness may lie ahead.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing