The Uganda Shilling has gained ground against the US dollar following the return of offshore investors to Uganda’s government securities market, attracted by improved yields, Bank of Uganda Governor Dr. Michael Atingi-Ego has said.
Atingi-Ego attributed the recent improvement to the Central Bank’s monetary policy interventions and increased investor interest in government securities, which have helped boost foreign currency inflows into the market.
He made the remarks on Tuesday, November 10, 2026, while appearing before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), where MPs sought an explanation for the weakening Shilling, rising dollar rate and increasing cost of living.
Committee Chairperson Hon. Muwada Nkunyingi asked the Governor to explain the state of the economy and whether there was hope of controlling inflation and rising commodity prices.
“One of the challenges we are seeing in this country is with the economy. The dollar rate has gone high and things have become expensive. It is the Bank of Uganda that can assist us to understand whether there is hope of managing inflation and commodity prices, among others,” Nkunyingi said.
In his response, Atingi-Ego explained that the recent decision by the United States Federal Reserve to raise its policy rate had contributed to the depreciation of the Shilling against the dollar.
He said the move made investments in US dollar-denominated assets more attractive compared to Ugandan government securities, prompting some foreign investors to withdraw their investments and convert the proceeds into dollars.
“We saw a number of non-residents who are holding Uganda government securities beginning to sell off these securities to buy dollars in the market. This added depreciation pressures on the currency, where we saw it move up to nearly Shs4,500,” Atingi-Ego said.
To contain the pressure, the Central Bank raised the Cash Reserve Ratio (CRR) from 11 per cent to 13.5 per cent. The CRR is the minimum proportion of commercial banks’ deposits and other specified liabilities that must be maintained as reserves at the Central Bank.
“We were able to pull in close to Shs1.3 trillion. We also made it expensive for commercial banks to access the liquidity facilities from the Central Bank by raising the Central Bank Rate on October 14, 2026, from 9.75 per cent to the current 12 per cent by 225 basis points,” he said.
According to Atingi-Ego, the interventions helped improve the attractiveness of government securities, contributing to the appreciation of the Shilling from nearly Shs4,500 to about Shs4,050 against the dollar.
He revealed that a recent government securities auction, in which the Government had offered Shs1.4 trillion, attracted renewed interest from offshore investors following an upward adjustment in yields.
“We had an auction the other week where Government had offered Shs1.4 trillion, and because of the upward shift in the yield curve, we saw a return of the offshore players into our market to buy government securities. They bought in excess of Shs200 billion and, as a result, we saw some dollar inflow in the market,” Atingi-Ego told MPs.
However, the Governor cautioned that monetary policy interventions alone were short-term measures and could not provide a sustainable solution to the country’s economic challenges.
He urged legislators to push for accelerated implementation of the Government’s Tenfold Growth Strategy, which prioritises agro-industrialisation, tourism development, mineral development, and science, technology and innovation.
Atingi-Ego said strengthening these sectors, particularly through value addition, would increase Uganda’s export earnings and improve the country’s foreign exchange position.
“We need to increase the export of goods and services. The key pillars of the Tenfold Growth Strategy include agro-industrialisation, tourism development, mineral development, science, technology and innovation, all of which support value addition on our raw materials,” he said.
Hon. Julius Nakiyi (NRM, Budadiri County East) supported the Governor’s emphasis on value addition, particularly in the agricultural sector, citing coffee as an area with significant potential to increase national earnings.
Nakiyi referred to a report by the Uganda Coffee Association, which projected that Uganda’s coffee earnings could triple through value addition, even without increasing production volumes.
“I read a report by the Uganda Coffee Association which said that if we do not increase coffee production, but rather maintain the same amount being produced today coupled with value addition, Uganda’s income can multiply by three times from the current Shs2.4 billion to about Shs6 billion,” Nakiyi said.
He called on Government to increase funding to the coffee sector to support production, processing and value addition, which he said could significantly boost the country’s earnings.
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