Uganda shilling falls to record low against dollar as demand surges

dollar: The US dollar is the dominant international reserve and trade currency and the principal foreign currency used to quote the Uganda shilling. In the reported episode, demand for dollars from offshore investors, manufacturers, energy companies, and importers outweighed available foreign-currency inflows, increasing pressure on the shilling. Uganda shilling: The Uganda shilling is Uganda’s national currency, traded in a managed-float foreign-exchange market overseen by the Bank of Uganda. It is the currency directly affected by the reported surge in dollar demand from offshore investors and importers, which pushed it to a record low against the US dollar. Import costs: Higher global oil prices and strong demand from energy and merchandise importers are increasing Uganda’s need for dollars to pay for imports. Market drivers: Recent reporting attributes the shilling’s weakness to offshore investors reducing local bond holdings and businesses purchasing dollars ahead of peak import activity. Central bank response: The Bank of Uganda has been using repo operations, central-bank bills, and foreign-exchange activity to manage interbank liquidity and moderate exchange-rate pressure.