Uganda's central bank said in an emailed note Tuesday it will hold a special MPC session on Wednesday, pulling forward its calendar from the next scheduled meeting on Nov. 12. Governor Michael Atingi-Ego will publish a monetary policy statement and then brief the press. The MPC last met on Aug. 13 and kept the benchmark rate at 9.75% for the eighth consecutive meeting.
The currency's slide has coincided with investors stepping back from riskier markets as the dollar gains and US yields climb. The shilling has weakened about 10% since Aug. 25, the sharpest drop among 144 currencies tracked by Bloomberg. On Tuesday it fell to 4,224 per dollar at its worst, then recovered to 4,135 by late afternoon in Kampala.
Emergency rate meetings are called when a currency is moving too fast. Market Briefs covers that action free every weekday.
"The urgency is about the exchange rate," said Ronald Ochen of the Civil Society Budget Advocacy Group, adding he suspects the MPC will lift the policy rate. Last week, President Yoweri Museveni ordered that dollars should not be sold by the central bank to prop up the shilling, saying, "I am totally against" the central bank governor's "proposal to squander our reserves and deploy more dollars in the market to counter the falling shilling," according to local media.
Inflation quickened to 4.6% in September, the highest reading in more than three years, with elevated energy prices linked to the wars in Ukraine and Iran. Uganda's foreign-exchange reserves stand near $6 billion, enough for about 2.7 months of imports, the IMF estimates. Ochen also pointed to "skyrocketing global oil prices," saying, "We are using reserves to buy the oil," and noted an imbalance in dollar supply versus demand. An emergency MPC was most recently convened by the central bank in 2024, when it hiked rates to bolster the shilling, following the World Bank's suspension of funding for Uganda over legislation that criminalized homosexuality.
A weaker local currency can ripple through everyday prices, especially when energy is already running hot. If policymakers opt to raise rates, borrowing costs could tick up while the shilling's slide may cool or continue depending on global flows. Keep an eye on how the central bank balances exchange-rate stability against growth, and whether reserve use to buy oil persists.
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