Uganda Shilling strengthens for sixth straight month as investor confidence rises

Uganda’s economy received another vote of confidence in October 2025 as the Shilling continued its steady appreciation against major global currencies, backed by strong foreign exchange inflows and improving financial market reforms, according to the latest Performance of the Economy Report released by the Ministry of Finance.

The report shows that the Shilling strengthened against the US Dollar for the sixth consecutive month, gaining 1.3 percent to trade at an average mid-rate of Shs 3,463.86/USD, up from Shs 3,507.79/USD in September. This marks one of the strongest stretches of currency stability Uganda has seen in recent years, especially following the volatility caused by global shocks in 2022–2023.

Officials attribute the Shilling’s robust performance to a surge in foreign exchange inflows from several fronts: offshore investors, diaspora remittances, and increased export earnings, particularly from coffee, which remains Uganda’s top foreign exchange earner. These inflows outpaced the demand for dollars from importers and corporates, helping to ease pressure on the local currency.

The report further highlights the role of prudent monetary policy by the Bank of Uganda (BoU). Recent reforms—including the adoption of the Global Master Repurchase Agreement (GMRA) and the FX Global Code—have improved liquidity across the interbank market and strengthened transparency in forex trading. These changes have helped reinforce investor confidence at a time when Uganda is courting more foreign capital to support both private sector recovery and public investment.

Uganda’s improving financial credibility was also reflected in its ranking in the Absa Africa Financial Markets Index (AFMI) 2025, where the country placed 3rd out of 29 African economies—a major leap that signals stronger regulatory frameworks, deeper markets, and growing investor interest.

The Shilling also posted strong gains against other major currencies in October. It appreciated by 2.3 percent against the British Pound, trading at an average mid-rate of Shs 4,625.97/GBP, compared to Shs 4,736.82/GBP in September. Against the Euro, the Shilling strengthened by 2.1 percent, reaching Shs 4,028.56/EUR, down from Shs 4,115.30/EUR the previous month.

The continued appreciation offers welcome relief for importers, who face lower costs for fuel, machinery, pharmaceuticals, and other critical imports. However, analysts note that a stronger Shilling may temper earnings for exporters whose goods become relatively more expensive in foreign markets.

Still, the Finance Ministry says the overall outlook remains positive, pointing to stable macroeconomic fundamentals, disciplined fiscal management, and increasing investor confidence. As global commodity markets stabilize and domestic reforms take root, the Shilling’s continued strength could support lower inflation and improved economic predictability heading into 2026.