By iNNoSOFt UG | Business & Economy
Uganda’s Shilling is coming under renewed pressure, recently crossing the Shs4,000-per-dollar mark as demand for foreign currency rises, particularly from fuel and merchandise importers.
The currency has depreciated by roughly 13 percent over the past year, increasing the cost of imported goods and putting additional pressure on businesses and consumers.
Bank of Uganda Governor Michael Atingi-Ego has acknowledged the pressure, saying the Shilling is market-determined and assuring the public that the central bank has the tools to manage excessive volatility.
“The Bank of Uganda has what it takes to stabilise this exchange rate. So, be still. All will be fine,” Atingi-Ego said.
Uganda’s growing import bill is adding to the challenge. Merchandise imports rose 25.4 percent to US$1.61 billion in July 2026, while exports increased by only 10.1 percent to US$1.40 billion, according to the Ministry of Finance.
The trade gap was even wider in June, when Uganda’s merchandise deficit more than doubled to US$597.9 million.
A weaker Shilling means importers require more local currency to purchase dollars, raising the cost of products such as fuel, vehicles, machinery, electronics and industrial inputs. These higher costs can eventually be passed on to consumers.
Depreciation can, however, make Ugandan exports more competitive on international markets. The challenge is whether export growth can outpace rising imports.
For Uganda, the long-term solution remains increasing export earnings, boosting local production and reducing excessive dependence on imported goods.
As the Shilling faces renewed pressure, the widening gap between what Uganda exports and what it imports remains a key concern for the economy.
