By Spy Uganda
Kampala: In East Africa, Uganda Shilling has been ranked the best performing so far giving a bloody nose to the dollar, whereas Rwanda franc’s value has slowed down.
The Ugandan shilling was stable since last week, thanks to some limited support from hard currency inflows from Ugandans living abroad.
On Wednesday last week at 0857 GMT, commercial banks quoted the shilling at 3,560/3,570 against the dollar, the same level as Tuesday’s closing rate.
According to statistics, the Uganda shilling is followed by the Tanzanian currency at 2.45 percent and 0.76 percent, respectively whereas Kenya shilling and Rwanda franc are ranked 11th and 12th among top African currencies depreciating at -2.93 percent and -3.48 percent respectively.
Currency policy in most of Africa is characterised as flexible without pegging the currency rate against the dollar.
The Uganda shilling is projected to remain strong to the end of 2021, buoyed by dollar inflows from coffee exports and foreign investors chasing yields.
Uganda is Africa’s biggest coffee exporter and shipments climbed to a record level in June on better yield from new trees, favourable weather and improved prices, according to the Uganda Coffee Development Authority.
Mid November, the IMF differed with Kampala, terming the Uganda currency overvalued and urged the authorities to only intervene in moments of “extreme” market distress.
Given uncertainties linked to the pandemic and recent appreciation of the exchange rate, Uganda’s planned fiscal consolidation will help to narrow the current-account deficit. The gap widened to $1.28 billion in the second quarter from a deficit of $702.3 million in the previous three months.
The IMF will visit Uganda this month to evaluate the “reform agenda” and discuss the next tranche of a three-year $1 billion loan. Uganda received $258 million when the loan was approved in June.