Uganda’s Finance Minister Henry Musasizi has urged Ugandans to avoid panic buying of foreign currency as the government moves to stabilise the shilling, which has weakened sharply against the United States dollar in recent months.

Addressing Parliament on Tuesday, October 27, 2026, Musasizi outlined the factors behind the currency’s depreciation and detailed measures being undertaken by the government and the Bank of Uganda to contain volatility and restore confidence in the foreign exchange market.

The shilling has weakened from approximately Shs3,604 per dollar in March 2026 to around Shs4,500 in late October, marking a significant depreciation that has increased concerns about the cost of imports, fuel and other dollar-denominated transactions.

Recent market reports have ranked the Ugandan currency among the world’s worst-performing currencies against the dollar. A report by *Daily Monitor* indicated that the shilling was the worst-performing currency among 144 currencies tracked by Bloomberg during the month, while subsequent reporting placed it second-worst globally after Iraq’s dinar.

What is driving the shilling’s depreciation?

Musasizi attributed the pressure on the currency primarily to an imbalance between the demand for and supply of foreign exchange, particularly US dollars.

He explained that when demand for dollars to finance imports and meet external obligations exceeds the supply generated through exports, investment and other foreign exchange inflows, the dollar becomes more expensive in the domestic market.

Higher international petroleum prices have added to Uganda’s demand for foreign currency, with geopolitical tensions in the Middle East increasing uncertainty and raising petroleum-related costs, including shipping and insurance.

The minister also noted that demand for foreign exchange had increased across other sectors of the economy, while international financial conditions and market expectations had contributed to the pressure.

Declining global prices for key agricultural exports, particularly coffee and cocoa, alongside reduced tourism receipts, have temporarily constrained foreign exchange inflows.

Market reports have additionally pointed to strong dollar demand from energy importers and other businesses, as well as foreign investors withdrawing funds from Uganda’s government securities market. These developments have intensified competition for available dollars.

Bank of Uganda raises interest rates

The government says it is working with the central bank to address the pressure through prudent fiscal management and tighter monetary policy.

The Bank of Uganda raised its Central Bank Rate from 9.75 per cent to 12 per cent on October 14, 2026, in an emergency policy move intended to moderate excessive demand, contain inflationary pressures and support confidence in the shilling.

The central bank also increased the Cash Reserve Requirement for commercial banks from 11 per cent to 13.5 per cent, effective September 24, 2026, to tighten liquidity in the financial system.

The Bank of Uganda has also intervened in the foreign exchange market by selling foreign currency to commercial banks to help curb excessive volatility. Reuters reported the intervention on October 22, following continued pressure on the shilling despite the interest rate increase.

Musasizi said the central bank would continue managing liquidity and, where necessary, intervene in the foreign exchange market in line with its mandate.

He reaffirmed Uganda’s commitment to a market-determined exchange rate, which allows the economy to adjust to changing external conditions.

The minister also emphasised the importance of prudent management of international reserves, describing them as a buffer against external shocks and a means of preserving the country’s ability to meet external obligations.

Government to cut non-essential expenditure

On the fiscal side, Musasizi said the government would support monetary policy through expenditure restraint and careful prioritisation of public spending.

He announced plans to rationalise non-essential expenditure, including foreign and domestic travel, workshops, meetings and other administrative costs, while protecting critical public services and priority development investments.

The approach is intended to reduce unnecessary expenditure while maintaining funding for essential government programmes and development priorities.

Seven key messages to Ugandans and businesses

Musasizi outlined measures households, businesses and government institutions should take as the country responds to the currency pressure.

He urged Ugandans to avoid panic-driven decisions, speculative foreign currency transactions and purchases based on rumours, warning that such behaviour could amplify short-term pressure on the shilling.

He said the government and Bank of Uganda would continue providing timely and factual information to help the public make informed decisions and maintain confidence in the economy.

Despite the current pressures, the minister maintained that Uganda’s economic fundamentals remained strong, with growth supported by production, investment and exports.

He called on households to prioritise essential expenditure, conserve fuel and energy, and make informed purchasing decisions.

Businesses were encouraged to eliminate waste, improve operational efficiency, source inputs locally where commercially viable and expand production for export markets.

What the depreciation means for Ugandans

A weaker shilling increases the amount of local currency required to purchase dollars, making imported goods and services more expensive when other factors remain unchanged.

This can raise costs for fuel importers, manufacturers, traders and businesses that rely on imported machinery, raw materials and other inputs. Some of these additional costs may eventually be passed on to consumers through higher prices.

Importers and borrowers with dollar-denominated obligations may face increased repayment costs, while exporters and recipients of foreign currency could receive more shillings when converting their earnings, depending on their cost structures.

The overall impact will depend on how long the depreciation persists, developments in global commodity prices, the availability of foreign exchange and the effectiveness of measures taken by the government and the central bank.

Musasizi urged the public to remain calm as the authorities implement measures intended to address the pressure, stressing the importance of responsible spending, efficient production and confidence in the economy.