Currency stabilization anticipated in Uganda prior to budget announcement
KAMPALA: The Ugandan buck held steady on Thursday, financial data revealed, as all eyes were on the finance minister delivering the 2025/26 (July-June) budget later in the day.
*Ugandan currency gathers momentum on commodity-led dollar inflows*
Come 0805 GMT, banks were quoting the Ugandan buck at 3,581/3,591, mirroring Wednesday's close.
The cautious market sentiment, with traders on edge for policy clarifications regarding government spending plans and possible fiscal reforms, has been weighing on the Ugandan buck. However, the currency has been boosted by strong commodity-related hard currency inflows, particularly from robust agricultural exports and increased remittances[1][5]. These factors have bolstered the dollar liquidity in the market, with the Ugandan buck appreciating significantly in recent weeks[5]. The currency reached a high of around 3,625/3,635 against the US dollar at its most recent peak[5]. Even the Central Bank intervened by purchasing dollars to absorb excess supply, contributing to the strengthening of the Ugandan buck and bolstering foreign reserves[5].
However, the Ugandan buck took a dip near the weekend as interbank demand for dollars resurged, with rates climbing to 3,600/3,610 per dollar compared to Thursday’s close of 3,585/3,595[4]. Despite this short-term slide, the overall trend for the Ugandan buck remains one of strength and resilience, ranking among Africa’s most stable currencies and appreciating 4% year-on-year by April 2025[3][5]. Commodity-driven dollar inflows continue to support the currency, yet analysts caution that structural issues persist in the Ugandan economy[1][5].
The strengthening of the Ugandan buck, as revealed by financial data, can be attributed to the steady influx of hard currency, primarily from robust commodity-related exports and increased remittances in the business sector. Amidst the 2025/26 budget announcement later in the day, investors keep a close watch on the finance minister's policy decisions regarding government spending plans and potential fiscal reforms.
