Bank of Uganda launches FX Swap curve to track dollar funding costs

KAMPALA, Uganda — The Bank of Uganda has introduced a new financial market benchmark designed to improve transparency around foreign currency funding costs and strengthen the efficiency of the country’s foreign exchange market.

For the first time, the central bank has published the Uganda Foreign Exchange Swap Curve. The benchmark shows the cost of exchanging Ugandan shillings for U.S. dollars across eight key periods, ranging from overnight transactions to one-year maturities.

The curve presents FX swap points as a chart and covers overnight, one-week, two-week, one-month, three-month, six-month, nine-month and one-year maturities. It will be updated and published daily as part of the central bank’s Daily Money Market Report.

Developed in collaboration with commercial banks and the London Stock Exchange Group, the benchmark relies on daily quotations submitted by commercial banks following a pilot project.

An FX swap is an arrangement in which two parties exchange one currency for another at an agreed rate, while simultaneously agreeing to reverse the transaction at a specified future date. The new benchmark illustrates the implied cost of obtaining foreign currency funding over time, helping institutions price transactions, manage risk and assess funding costs.

Commercial banks can use the curve to value financial positions, while international trade businesses gain a transparent reference to evaluate foreign exchange costs. Investors and policymakers are also expected to monitor the benchmark to assess dollar liquidity and broader market conditions.

The initial publication reflects data as of Aug. 6 at 5 p.m.

Central bank officials cautioned that the published curve serves as a reference benchmark rather than a guaranteed price for every transaction. Actual prices may vary based on market conditions, liquidity and negotiated terms.