Finance minister Henry Musasizi has urged Ugandans to stop panic buying of US dollars and avoid speculative foreign exchange transactions driven by rumours, warning that such behaviour could worsen pressure on the shilling.
Musasizi made the call while presenting a statement on the state of Uganda’s economy to Parliament, where he explained the factors behind the shilling’s recent depreciation and outlined measures the government and the Bank of Uganda are taking to stabilise the currency.
The shilling has weakened from approximately Shs 3,604 per US dollar in March 2026 to around Shs 4,500 by late October, raising concerns about the cost of imports and the potential impact on domestic prices.
“Remain calm, avoid panic-driven decisions,” Musasizi urged Ugandans, calling for informed decisions rather than speculative transactions that could amplify short-term pressure on the currency.
He said the depreciation largely reflects an imbalance between the demand for and supply of foreign exchange, particularly US dollars. Demand for dollars to finance imports and meet other external obligations has exceeded the supply generated by exports, investment and other foreign exchange inflows.
Musasizi attributed part of the pressure to rising international petroleum prices, which have increased Uganda’s demand for foreign exchange. Geopolitical tensions in the Middle East have heightened uncertainty and raised petroleum-related costs, including shipping and insurance.
Demand for foreign exchange has also increased across other sectors, while international financial conditions and market expectations have contributed to the pressure.
On the supply side, declining global prices for key agricultural exports, particularly coffee and cocoa, alongside reduced tourism receipts, have temporarily constrained Uganda’s foreign exchange inflows.
Government tightens spending
To address the pressure, the Bank of Uganda has tightened monetary conditions, raising the Central Bank Rate from 9.75 per cent to 12 per cent and increasing commercial banks’ cash reserve requirement from 11 per cent to 13.5 per cent.
The measures are intended to moderate excessive demand, contain inflationary pressures and support confidence in the shilling.
Musasizi said the central bank would continue managing liquidity and, where necessary, intervene in the foreign exchange market to address excessive volatility.
Uganda, however, remains committed to a market-determined exchange rate, which allows the economy to adjust to changes in external conditions.
On the fiscal side, the government plans to rationalise non-essential expenditure, including foreign and domestic travel, workshops, meetings and other administrative costs.
Musasizi said the spending cuts would be implemented while protecting critical public services and priority development investments. He added that prudent fiscal management and careful prioritisation were necessary to support monetary policy.
He also emphasised the importance of managing the country’s international reserves prudently, saying they provide a buffer against external shocks and help Uganda meet its external obligations.
Households, businesses advised
Despite the pressure on the shilling, Musasizi maintained that Uganda’s economic fundamentals remained strong, with growth supported by increased production, investment and exports.
He said the government and the Bank of Uganda would continue providing timely, factual information to help the public make informed decisions and sustain confidence in the economy.
Musasizi urged households to prioritise essential expenditure, conserve fuel and energy, and make informed purchasing decisions.
Businesses were advised to eliminate waste, improve operational efficiency, source inputs locally where commercially viable and expand production for export markets.
The depreciation of the shilling can increase the cost of imported fuel, machinery, medicines and other goods, potentially putting additional pressure on domestic prices. Businesses that depend heavily on imported raw materials may also face higher operating costs.
