Kampala — Uganda’s foreign exchange reserves surged by 56% in the year to June 2026, strengthening the country’s external financial position as the central bank plans to expand gold purchases to diversify its reserve assets.
The Bank of Uganda reported that foreign exchange reserves rose to $6.7 billion in the 12 months to June, up from $4.3 billion in the previous year.
In its report, the central bank said the increase had reinforced confidence in Uganda’s macroeconomic position and its resilience to external economic pressures.
The bank also confirmed that it would continue its gold purchase programme in the 2026/27 financial year, which runs through June 2027. The initiative is intended to diversify the country’s reserves and reduce its reliance on traditional reserve assets.
Despite the significant increase, Uganda’s reserves currently provide approximately 3.7 months of import cover, falling short of the central bank’s target of four months.
Foreign exchange reserves are an important financial buffer, helping countries meet international payment obligations, finance imports and manage external economic shocks.
The stronger reserve position could also provide some support for Uganda’s currency, the shilling, which has weakened sharply in recent weeks, reaching successive record lows against the US dollar.
However, the Bank of Uganda has indicated that it does not intend to defend a specific exchange rate level through market intervention. Instead, its approach is focused on smoothing excessive volatility in the foreign exchange market.
The shilling’s recent depreciation highlights the challenges facing the currency despite the improvement in the country’s external reserves.
Uganda’s decision to increase gold holdings reflects a broader strategy to diversify its reserve portfolio while strengthening its capacity to withstand global financial uncertainty.
Source: Reuters
Reporting: Elias Biryabarema
Editing: George Obulutsa
