Atingi-Ego: BoU has the tools to steady the Uganda Shilling

KAMPALA. Bank of Uganda Governor Michael Atingi-Ego has sought to calm concerns over the recent depreciation of the shilling, saying the Central Bank has the tools to contain excessive volatility in the exchange rate.

Speaking at the 9th Annual Bankers Conference at the Kampala Marriott Hotel, Dr Atingi-Ego attributed the latest pressure on the currency partly to developments in global oil markets, saying Uganda’s exchange rate is market-determined.

“Towards the end of last week, the currency began to depreciate quite significantly. You all know what’s happening in global oil prices, and our currency is a market-determined currency,” he said.

The shilling was trading at about Sh3,930 to the US dollar in the second week of September, according to the governor, amid renewed pressure on the currency.

Mr Atingi-Ego said the current movement was not unprecedented, pointing to previous episodes when the shilling came under pressure but later stabilised.

He cited the period between July and August 2022, when central banks in advanced economies raised interest rates, triggering capital outflows from emerging and frontier markets.

During that period, the shilling weakened from about Sh3,650 to the dollar in February 2022 to nearly Sh3,900 before stabilising, he said.

The governor also recalled August 2023, when the World Bank announced that it would not disburse new financing to Uganda.

The announcement was followed by pressure on the shilling, which moved close to the Sh4,000 mark, but the economy weathered the shock, he said.

In February 2024, the currency again approached Sh4,000 to the dollar after a neighbouring country issued bonds to buy back a Eurobond and subsequently floated infrastructure bonds.

Dr Atingi-Ego said Uganda had similarly navigated that episode.

He used the examples to reassure financial sector players that the latest depreciation should not trigger panic.

“In September 2026, because of global oil developments, the currency is trading at about Sh3,930 right now,” he said.

Mr Atingi-Ego urged banks and other financial sector players to remain calm, saying the Central Bank would continue to monitor developments and respond where necessary.

“Why am I bringing all this? I am bringing all this to say Bank of Uganda has what it takes to stabilise this exchange rate. So, be still. All will be fine,” he said.

The governor’s remarks come amid heightened attention to movements in the foreign exchange market, with businesses facing higher costs for imported goods and inputs whenever the shilling weakens.

Uganda’s exchange rate is largely determined by demand and supply in the foreign exchange market, although the Bank of Uganda can intervene to smooth excessive volatility and maintain orderly market conditions.