Uganda's central bank has intervened in the foreign exchange market to support the weakening shilling, after a sharp interest rate increase failed to reverse the currency's losses against the US dollar.
The Bank of Uganda (BoU) informed commercial banks on Thursday that it was selling foreign currency, although it did not disclose the amount involved.
“BOU (The Bank of Uganda) is in the FX market on the sell side,” the central bank said in a notice to banks, without providing further details.
The intervention comes as the Ugandan shilling has faced sustained pressure in recent weeks, repeatedly hitting record lows against the US dollar.
Last week, the central bank raised its benchmark interest rate by 225 basis points to 12% following an emergency monetary policy meeting. The move was aimed at curbing the currency’s decline and stabilising the foreign exchange market.
The shilling initially recovered some ground after the rate increase was announced but subsequently resumed its downward trend. It is now trading weaker than it was when the central bank raised interest rates.
The latest foreign exchange intervention signals further efforts by the Bank of Uganda to ease pressure on the currency as market losses persist despite tighter monetary policy.
Source: Reuters
Reporting by: Vincent Mumo Nzilani and George Obulutsa
Editing by: Aidan Lewis and Alexander Winning
