Uganda Shilling falls to lowest level in 33 years as investors pull out dollars

Uganda’s shilling has weakened to Shs4,143 against the US dollar, its lowest level since at least 1993, as foreign investors withdraw funds and businesses compete for scarce foreign currency.

The currency has lost more than 10 per cent since August 25, 2026. That marks the sharpest decline among 144 currencies tracked by Bloomberg over the period, according to reporting on October 12, 2026. 

The slide threatens to raise costs for importers and households. Businesses need more shillings to pay dollar-denominated bills for fuel, machinery and other goods. If they pass those costs to customers, consumers could face further price increases.

Citigroup estimates that about $200 million left Uganda’s markets in two weeks. Investors have reduced their exposure to local-currency bonds as higher returns on dollar assets draw money elsewhere. Growing corporate demand for dollars has added to the pressure. 

The latest fall follows the shilling’s first close above Shs4,000 per dollar on October 5, 2026. Central bank data put that day’s closing mid-rate at Shs4,023.57, compared with Shs3,966.90 the previous Friday.

President Yoweri Museveni has opposed using foreign-exchange reserves to prop up the currency. He instead wants Uganda to cut imports and earn more dollars through exports and tourism.

Museveni criticised spending reserves to support imports such as perfumes and human-hair wigs. He urged Ugandans to consume locally produced goods to reduce demand for foreign currency. 

The Bank of Uganda has also signalled that it does not plan to defend the shilling through direct dollar sales. It has instead tightened liquidity by raising the share of deposits commercial banks must hold as reserves.

The cash reserve requirement increased from 11 per cent to 13.5 per cent, effective September 24, 2026. The measure reduces money available for lending and other transactions, which could help ease pressure on the exchange rate. 

Uganda’s growing import bill compounds the challenge. Goods imports reached $2.31 billion in August, a 66.5 per cent increase from a year earlier, according to the report shared. The rise widened the gap between what Uganda spends abroad and what it earns from goods exports.