The half year 2020/21 macroeconomic and fiscal performance of Uganda economy report by the Ministry of Finance, Planning and Economic Development reveals that the Ugandan currency appreciated against the dollar by 1.2 percent to a period average exchange rate of Uganda Shilling 3,696 per US dollar in Half 1 (six months) of 2020/21.
The Ministry further indicated that in the same period in the fiscal year 2019/20, the Shilling traded at 3,741 per US dollar in the first six months of 20219/20.
The Ministry officials explain that the strengthening of the shilling during this period was supported by steady dollar inflows from offshore investors in the primary money market, export receipts and transfers to NGOs which outweighed the dollar demand.
“The weakening of these currencies against the dollar is partly due to the higher trade deficits and increasing demand for safe-haven assets as the spread of Covid-19 pandemic weighed heavily on market sentiments, ” said the Ministry said in its macroeconomic and fiscal performance of Uganda, economy report.
On the international Reserves; the Ministry of Finance says the stock of Uganda’s reserves at the end of December 2020 was estimated at Shs3.848 billion which is equivalent to 4.98 months of future imports of goods and services.
The Bank of Uganda says in its current macroeconomic report that the Uganda Shilling has remained relatively stable partly reflecting low activity in the interbank foreign exchange market.
“The shilling weakened in January 2021 compared to previous month depreciating by 0.7 per cent month-on-month and 0.3 per cent year on year to an average mid-rate of Shs3691.68 per US dollar,” said the Bank of Uganda.
The Bank of Uganda further explained that activity in the interbank foreign exchange market (IFEM) was subdued with demand from Uganda Airlines, offshores, oil and manufacturing sector partly offset by the weakening US dollar and inflows from NGOs and agricultural sector.
Going forward, The Bank of Uganda says the exchange rate is likely to depreciate on account of recovery in demand that is projected to worsen the current account deficit.
The net BoU actions in the interbank foreign exchange market (IFEM) in December 2020 and January 2021, was a Purchase of $148.9 million. And as at February 12th 2021, the net BoU actions amounted to $299.40 million against a reserve build-up of $194.2 million.
The Bank of Uganda says movements in EAC Partner State currencies relative to the US Dollar were mixed in the four months to January 2021. In January 2021, the Kenya Shilling appreciated by 0.7 per cent to KShs109.8 after depreciating after depreciating for three previous months.
The Rwanda Franc continued to depreciate for the fourth month but at a slowed pace depreciating by 0.3 per cent in January 2021 to RWF 973.8 per US dollar.
However, the Tanzanian shilling remained relatively stable, depreciating slightly by 0.02 per cent in January 2021 to TShs 2298.4 per US dollar. In the quarter ending January 2021, on average, the Tanzania Shilling was stable depreciating by only 0.01 per cent quarter-on-quarter to an average rate of TShs 2,297.99 per US dollar. While the Kenya Shilling and Rwanda Franc depreciated 1.4 per cent and 1.7 per cent each to an average of KShs 109.9 and RWF 970.1 per US dollar in the three months to January 2021.
Source link : https://www.monitor.co.ug/uganda/news/national/uganda-shilling-appreciates-by-1-2-says-finance-3324716
Publish date : 2021-03-16 12:28:12