Uganda taps $7B reserves to stabilize plunging shilling

Uganda: Uganda is an East African country whose economy is facing acute pressure from a rapidly depreciating local currency. In response to the ongoing decline of the Ugandan shilling, authorities have turned to selling portions of the nation's foreign exchange reserves to reduce volatility and support stability. This measure follows recent sharp monetary policy tightening by the central bank aimed at addressing the currency's weakness. Policy Response: Uganda's central bank has implemented a substantial increase in its benchmark interest rate alongside foreign currency sales to defend the shilling. Currency Pressure: The Ugandan shilling has ranked among the world's weakest performing currencies in recent weeks, trailing only the Iraqi dinar in monthly performance against the dollar. Reserves Management: Foreign exchange reserves have been drawn upon as a key tool to smooth currency fluctuations amid the recent depreciation.