Overview:
At the opening of business on Tuesday, the US dollar was trading at a buying rate of Shs3,771.50 and a selling rate of Shs3,781.50, a relatively narrow spread that signals stable liquidity in the foreign exchange market.
KAMPALA — The Uganda Shilling has in recent weeks held steady against major global currencies, defying mounting pressure from rising geopolitical tensions in the Middle East that threaten to disrupt global trade and fuel prices.
At the opening of business on Tuesday, the US dollar was trading at a buying rate of Shs3,771.50 and a selling rate of Shs3,781.50, a relatively narrow spread that signals stable liquidity in the foreign exchange market.
The British pound remained the strongest major currency, quoted at Shs5,057.58 buying and Shs5,072.88 selling, while the euro traded at Shs4,371.16 and Shs4,383.89 respectively.
Across the East African Community (EAC), the Uganda Shilling has also remained firm. The Kenyan shilling traded at 29.07 buying and 29.20 selling, the Tanzanian shilling at 1.44 and 1.48, while the Rwanda franc stood at 2.57 and 2.59.
This relative stability, analysts say, reflects steady inflows from exports, remittances, and tight monetary policy by the Bank of Uganda. However, the bigger question remains whether the local currency can sustain this resilience as global uncertainty deepens.
The ongoing conflict in the Middle East has already pushed up global oil prices, raising concerns about increased import bills for oil-dependent economies such as Uganda. Higher fuel costs typically translate into increased demand for dollars, which puts pressure on the local currency.
Data from the Ministry of Finance shows early signs of this strain. According to the Performance of the Economy report for February 2026, the shilling depreciated slightly against the US dollar by 0.2 percent, trading at an average mid-rate of Shs3,568.23 compared to Shs3,562.14 in January.
The local currency also weakened against the British pound by 0.5 percent and the euro by 0.8 percent over the same period. It traded at an average of Shs4,844.81 per pound and Shs4,218.45 per euro, up from Shs4,818.52 and Shs4,185.45 respectively in January.
The ministry attributes this pressure to seasonal corporate demand for foreign currency, particularly from energy and manufacturing sectors, as well as rising global oil prices.
Analysts warn that these pressures could intensify if the Middle East conflict escalates further, disrupting supply chains and driving up commodity prices.
“Uganda’s stability is largely anchored on controlled inflation and steady inflows, but external shocks like oil price spikes can quickly reverse those gains,” an economist said.
Despite these risks, the shilling’s recent performance suggests underlying resilience, supported by prudent monetary policy and relatively stable macroeconomic fundamentals.
The Bank of Uganda is expected to remain vigilant, using its policy tools to manage volatility in the foreign exchange market.
For now, the shilling appears stable—but with global tensions rising, its ability to hold that ground will largely depend on how external shocks evolve in the coming months.