Governor Atingi-Ego
HABARI DAILY I Kampala, Uganda I The Ugandan shilling has been on an impressive upward streak, strengthening consistently for the past 14 months. According to Bank of Uganda Governor Michael Atingi-Ego, this appreciation is a reflection of the country’s improving economic fundamentals rather than any deliberate currency interventions by the central bank.
“The currency has indeed appreciated for about 14 months. But let me clarify—the Bank of Uganda did not intervene during that period. Our last sale-side intervention was in June 2022,” the Governor noted, emphasizing that the performance of the shilling has been driven by market forces.
Governor Atingi-Ego attributed the Ugandan Shilling rally to strong export performance, particularly in coffee and cocoa, with global coffee prices boosting Uganda’s earnings, a disciplined monetary policy stance that has anchored inflation expectations and strengthened investor confidence and reforms within the foreign exchange market that improved efficiency and transparency.
He additionally said that the Shilling is doing well due to the increased portfolio inflows from offshore investors seeking stable returns and a generally weaker US dollar that has supported emerging market currencies.
“Unlike some economies that opt to shield exporters by intervening in currency markets, Uganda continues to maintain a market-determined exchange rate system,” he said, adding that supporting exporters artificially would risk inflation and higher interest rates.
“Our focus is preserving stability without distorting fundamentals. This approach has enabled the currency to find its fair value based on real supply and demand dynamics,” he noted.
While exporters may face challenges due to reduced price competitiveness, the stronger shilling has eased import costs, helped stabilize inflation, and improved confidence in Uganda’s financial markets. Consumers and businesses dependent on imported goods are already feeling relief from reduced forex pressures.
The Governor concluded that the shilling’s appreciation is particularly not about short-term gains and is more of a reflection of Uganda’s resilience and economic discipline:
“The shilling’s appreciation reflects strong fundamentals – not intervention. Our duty is to ensure the economy remains resilient without undermining market dynamics.”
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