Uganda's weakening shilling has pushed a political disagreement into the open, pitting opposition demands against President Yoweri Museveni‘s own economic strategy.
A falling shilling has turned a technical currency debate into a public clash between opposition demands and Museveni's economic vision.
Conservative Party president John Ken Lukyamuzi has rejected Museveni's export-led approach to stabilizing the currency, calling instead for the Bank of Uganda to draw at least $2.5 billion from reserves for direct market intervention. The proposal remains an opposition demand, not a confirmed government or central-bank decision.
Lukyamuzi argues that Uganda's export earnings are too small to strengthen the shilling quickly enough. He wants the central bank to step directly into the foreign-exchange market, using a sum that would represent a substantial chunk of reserves estimated at $6 billion to $6.7 billion in recent reporting. His goal is simple: ease pressure on a currency that slipped past Shs4,500 per dollar during the week of the briefing.
Museveni sees things differently. He's pushed back against using reserves to push down the dollar's price, warning that reserves shouldn't subsidize imports. His preferred fix involves boosting domestic production, growing exports, and cutting reliance on imported goods over time. Central banks elsewhere, such as the Central Bank of Nigeria, have faced similar debates over using direct market interventions versus structural reforms to defend a currency.
The shilling's slide isn't just a political talking point. It touched more than Shs4,500 per dollar on October 23, its weakest nominal level in 33 years, according to Bank of Uganda rates cited in reporting.
That depreciation raises the local-currency cost of imports and business inputs, while rising fuel prices add further strain on households. Museveni has tied some of this pressure to geopolitical conflict and shifting global capital flows, alongside weaker foreign-currency inflows and stronger dollar demand.
The Bank of Uganda has already moved on its own. It raised its Central Bank Rate by 225 basis points, from 9.75% to 12%, at a special meeting on October 14. It had also lifted the cash reserve requirement to 13.5% in September.
The bank sold roughly $30 million that same day, its first direct dollar sale since June 2022, then returned to the market on October 22 without disclosing the amount.
Reserve figures vary by source, ranging from $6.7 billion in June to around $6.9 billion as of October 23, equivalent to roughly 3.7 months of import cover. Markets will likely watch whether the central bank deepens its intervention or holds its current, more measured course.
