Finance Minister Henry Musasizi has urged Ugandans to avoid panic buying of foreign currency and speculative transactions driven by rumours as the Uganda shilling comes under pressure, weakening to about Shs4,500 against the US dollar.
Musasizi said the government and the Bank of Uganda were implementing measures to stabilise the currency, contain inflationary pressures and maintain confidence in the economy.
Addressing Parliament on the state of Uganda’s economy, the minister said the shilling had weakened from approximately Shs3,604 per US dollar in March 2026 to around Shs4,500 by late October.
He attributed the depreciation to an imbalance between the demand for and supply of foreign exchange, particularly the US dollar, as Uganda spends more on imports and other external obligations.
“When demand for dollars to finance imports and meet other external obligations exceeds the supply generated by exports, investment and other foreign-exchange inflows, the price of the dollar rises,” Musasizi said.
He explained that rising international petroleum prices had increased Uganda’s demand for foreign currency, while geopolitical tensions in the Middle East had driven up oil-related costs, including shipping and insurance.
The minister added that declining global prices for key agricultural exports, particularly coffee and cocoa, coupled with reduced tourism receipts, had temporarily constrained the country’s foreign-exchange inflows.
He also cited international financial conditions and market expectations as factors contributing to the pressure on the shilling.
Musasizi said the Bank of Uganda had tightened monetary policy to moderate excessive demand, contain inflationary pressures and support confidence in the local currency.
The measures include raising the Central Bank Rate from 9.75 per cent to 12 per cent and increasing the cash reserve requirement for commercial banks from 11 per cent to 13.5 per cent.
“The Bank of Uganda will continue to manage liquidity and, where necessary, intervene in the foreign-exchange market to address excessive volatility, consistent with its mandate,” he said.
Musasizi noted that Uganda remained committed to a market-determined exchange rate, allowing the shilling to adjust to changes in external economic conditions.
He also emphasised the importance of prudent management of the country’s international reserves to cushion the economy against external shocks and ensure Uganda can meet its foreign obligations.
On the fiscal front, Musasizi said the government would complement monetary policy measures through expenditure restraint and careful prioritisation of public spending.
He said the government would rationalise non-essential expenditure, including foreign and domestic travel, workshops, meetings and other administrative costs, while protecting critical public services and priority development investments.
The minister added that the government and the Bank of Uganda would continue providing timely and factual information to help Ugandans make informed decisions and maintain confidence in the economy.
Despite the current pressures, Musasizi maintained that Uganda’s economic fundamentals remained strong, with growth supported by increased production, investment and exports.
He urged households to prioritise essential spending, conserve fuel and energy, and make informed purchasing decisions as the economy adjusts to external pressures.
Musasizi also called on businesses to eliminate waste, improve operational efficiency, source inputs locally where commercially viable and expand production for export markets.
He cautioned against panic-driven decisions, warning that speculative foreign-exchange transactions and panic buying could intensify short-term pressure on the shilling.
He said coordinated fiscal and monetary measures, combined with responsible decisions by households and businesses, would help Uganda navigate the current economic challenges.
