Why the U.S. dollar’s fall in Uganda isn’t just a Forex story

Every morning as I drive to work along Kyanja Road, I pass a line of forex bureaus. Their bright digital boards flash new figures each day, green for buying, red for selling.

A few weeks back, I would glance up and see the dollar trading at around UGX 3,740. But with time, the numbers began falling silently. From 3,740 to 3,700, then 3,650, and now hovering around UGX 3,450.

At first, I didn’t think much of it. The change felt gradual, almost unnoticeable. But one morning, it struck me, the U.S. dollar, that long-dominant currency, was losing ground to our shilling faster than most people realize.

And yet, as I sat in traffic watching people walk past these glowing boards, it amazed me how few seemed to care. For most, those blinking numbers might as well be Christmas lights. But beneath them lies a quiet economic story shaping every Ugandan’s life, whether they know it or not.

Foreign exchange, or forex, is not just for bankers and traders. It’s the engine that keeps an economy running. It’s the rate at which Uganda’s shilling meets the rest of the world, determining the cost of imports, exports, debt, travel, and even daily consumer prices.

For the country, forex signals economic strength. A stable or appreciating shilling means confidence in Uganda’s macroeconomic management, healthy reserves, and adequate foreign inflows.

For businesses, forex decides profit margins, pricing strategies, and competitiveness. And for the ordinary person, it quietly determines the price of bread, soap, cooking oil, and fuel.

According to Bank of Uganda data and market sources, the Ugandan shilling has appreciated by nearly 8% in just a few months, moving from UGX 3,740 per U.S. dollar in mid-2025 to about UGX 3,450 in early October 2025.

Regionally, Uganda is outperforming its peers. Kenya’s shilling has stabilized around KSh 128 per dollar after a tough 2023, while Tanzania’s currency remains largely steady due to strong export receipts. But Uganda’s gain stands out-driven by strong inflows and calm market conditions.

This is not just statistical trivia. A move of 300 shillings per dollar can shift profit margins, change import bills, and affect inflation patterns. It’s a big deal, even if most people don’t see it.

Several powerful forces are converging to make the Ugandan shilling stronger.

First, foreign inflows have increased. Uganda continues to earn solid export receipts from coffee and gold, while remittances from Ugandans abroad remain robust, averaging over $1.4 billion annually. NGO and donor funds, as well as foreign investment linked to infrastructure and oil projects, are also injecting fresh dollars into the system.

Second, import demand has eased. With global shipping costs stabilizing and domestic demand subdued, fewer importers are scrambling for dollars. The result is a relative oversupply of foreign currency.

Third, the U.S. Federal Reserve’s softer policy stance has globally weakened the dollar. As global investors anticipate lower returns on dollar assets, they diversify into other markets, including emerging currencies like Uganda’s.

Finally, central bank actions and market confidence play a role. The Bank of Uganda’s accumulation of foreign reserves, now estimated at over $4 billion, and its credible monetary stance have boosted investor trust. Stability breeds strength, and the shilling is reaping those dividends.

Here’s the reality: most Ugandans don’t follow forex movements. The average consumer doesn’t pause to wonder why the rate on the forex board has changed, because it feels distant. Yet it’s anything but. When the dollar drops from 3,740 to 3,450, the impact seeps into every corner of the economy. Importers who bring in goods from rice and fuel to phones and building materials, suddenly pay less in shillings.

If they choose to pass that saving to customers, prices drop, and inflation eases. For example, a trader importing goods worth $10,000 would have needed UGX 37.4 million a few months ago. Today, they need only UGX 34.5 million, a saving of UGX 2.9 million on the same order. That is real money. 

But it cuts both ways. Exporters, especially coffee, tea, and fish traders, are earning fewer shillings per dollar, which eats into their local returns. And for those with USD loans, this is the moment of relief: every repayment installment now costs fewer shillings.

In short, the strong shilling quietly changes who gains and who loses. Yet because the effects filter through gradually, at the pump, in the market, in the price of construction materials, many never connect the dots.

For businesses, this is a season of reflection. Importers should capitalize on lower exchange costs to build stock or invest in efficiency. Exporters, on the other hand, should revisit pricing models, renegotiate supply contracts, and explore natural hedges such as sourcing local inputs to balance currency risk. For consumers, a stronger shilling can bring short-term relief.

Fuel and imported goods may become slightly cheaper, reducing transport and food inflation. But consumers should remember: forex markets are cyclical. Today’s comfort can vanish quickly if global shocks or local imbalances emerge.

And for policy makers, this moment is one to consolidate gains, maintaining macroeconomic discipline, supporting export diversification, and managing reserves prudently to avoid sharp reversals.

The dollar’s fall to around UGX 3,450 is more than a forex headline. It’s a signal of renewed confidence in Uganda’s economy, sound monetary management, and improved foreign exchange inflows outpacing demand. This appreciation reflects a moment of balance, where fiscal discipline, export performance, and investor trust are converging.

Yet, the strength of the shilling is fragile, currency markets react swiftly to shocks, policy shifts, or regional instability. So, when you pass a forex bureau and see those flashing rates, pause and think! those numbers quietly shape the price of your fuel, your rent, your child’s school fees, and even the cost of bread. The exchange rate isn’t distant economics; it’s the daily pulse of Uganda’s financial life.

The shift from 3740 to 3450 tells a quiet but important story about Uganda’s economy. It is a reminder that currency changes affect everyone, not just traders or economists. For Ugandans, this is a time to plan wisely. Importers can take advantage of the strong shilling to stock goods at lower cost. Exporters should review their prices and protect their earnings in case the rate turns again.

Households may feel some relief in prices, but it is wise to save or invest the extra value while it lasts. A stable shilling reflects confidence and good management, but it can change quickly with global or regional pressures. Staying alert, planning ahead, and managing money carefully will help Ugandans make the most of this season of strength.

The writer is a chartered accountant, analyst and chartered tax advisor