Ugandan Shilling Hits Record Low as Museveni Rejects Use of Forex Reserves

Uganda is facing increasing pressure on its currency as the shilling continues to weaken against the US dollar. The depreciation has raised concerns about the cost of imports and the country’s foreign-exchange reserves.

President Yoweri Museveni has opposed a proposal to use Uganda’s foreign-exchange reserves to support the shilling. His position has drawn attention to the government’s approach to managing the currency’s decline.

According to reports published by credible news outlets, Museveni rejected a proposal by the Bank of Uganda to sell dollars from its reserves to increase their availability in the market. He argued that the reserves should be preserved rather than used to support the shilling.

Museveni also noted that a weaker shilling could benefit exporters by increasing the amount of local currency they receive when converting their dollar earnings. He encouraged Ugandans to reduce non-essential imports to ease pressure on foreign-exchange demand.

The shilling’s depreciation has been linked to strong demand for dollars from importers and pressure on the supply of foreign currency. These factors have made it more expensive for businesses to pay for goods and services purchased from abroad.

Currency movements can also affect the prices of imported products, including fuel and other essential goods. Businesses that rely on imported materials may face higher costs when the shilling loses value against the dollar.

The Bank of Uganda has monetary policy tools available to address inflation and currency instability. However, using foreign-exchange reserves to influence the market can reduce the funds available to meet future external payment needs.

The situation highlights the challenge facing Uganda’s authorities as they seek to manage exchange-rate pressures while preserving financial stability. The shilling’s future performance will depend on foreign-currency supply, demand for imports and wider economic conditions.

Source link : .https://www.tuko.co.ke/business-economy/economy/644568-ugandan-shilling-suffers-historic-depreciation-museveni-refuses-spend-thin-forex-reserves/

ScottTechMedia feedback-opera-news-app@opera.com