The Bank of Uganda attributed the Uganda shilling's decline against the US dollar to the ongoing conflict in the Middle East and volatile global coffee markets, as revealed during a town hall meeting in Kabale District on September 25, 2026. Deo Sunday, a Monetary Policy Department official, noted that the shilling had weakened from 3,740 to 3,940 shillings per dollar, with exchange rates fluctuating between 3,705 and 4,035 shillings at local banks. The remarks came as part of the central bank's 60th-anniversary initiatives to educate communities on financial systems and economic stability in the Kigezi sub-region.
Sunday highlighted that the US dollar's appeal as a safe-haven currency amid Middle East tensions had intensified demand, exacerbating the shilling's depreciation. He also cited global coffee price swings and adverse weather disrupting production as contributing factors. Despite these pressures, the Bank of Uganda maintained its monetary policy framework, including raising the Cash Reserve Requirement (CRR) from 9.5% to 11% to manage liquidity and curb inflation. 'Ugandans must remain patient as we navigate these challenges,' Sunday said, emphasizing the central bank's commitment to economic resilience.
The depreciation has sparked concerns among local businesses and households, with exchange rates at Kabale banks showing significant variation. Sunday acknowledged the shilling's previous status as one of Africa's stronger currencies but stressed that external shocks required adaptive measures. The central bank's actions aim to balance short-term volatility with long-term stability, ensuring financial systems remain robust amid global uncertainties. 'Our policies are designed to protect the economy while fostering growth,' he added, underscoring the importance of public understanding of monetary strategies.
The Bank of Uganda's explanation underscores the interconnectedness of global markets and local economies. As the central bank continues its 60-year mission, its focus on transparency and proactive measures remains critical in addressing challenges like currency fluctuations. Stakeholders are urged to monitor developments while trusting in the institution's efforts to maintain economic equilibrium in the face of evolving international dynamics.