Bank of Uganda explains shilling fall against dollar. This according to the bank was mainly for two reasons. First the dollar has itself strengthened dramatically on global markets, for example by 13 percent against the Euro since the start of 2015.
Second, in Uganda demand for dollars has increased strongly, mainly from the corporate sector, to fund imports and dividend payments to foreign shareholders following improved corporate profits in 2015. Unfortunately export earnings have declined mainly because of problems in regional markets, hence the current account deficit has widened.
The BoU?s policy is not to peg the exchange rate or otherwise prevent it from adjusting to levels which are sustainable in the long run. However, when exchange rate movements are too rapid, the BoU will intervene to dampen volatility. After a sharp fall in the Shilling in mid morning, the BoU intervened and sold dollars, which restored some stability to the market.
It also mentioned that the strength of Uganda?s macroeconomic framework has been recognized by, among others, the international credit rating agencies.