The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The Ugandan Shilling continued strengthening against the US Dollar in the year 2024/25 as remittances, exports and new government policies.
The local currency ended June 2025, trading at an average mid-rate of 3,605.84 Shillings per dollar, compared to 3,653.40 per USD in May 2025, leading to a 1.3 percent appreciation.
On an annual basis, the shilling appreciated by 2.7 percent against the US Dollar in financial year 2024/25 compared to 2023/24.
According to data at the Bank of Uganda, the average mid-rate for the Shilling against the US Dollar was 3,778.61 per dollar in the previous year, declining to 3,676.21 last year.
“The relative strengthening of the Shilling against the US Dollar in 2024/25 was largely due to some financial market reforms that reduced demand for the US dollar, increased remittances, offshore portfolio investments, export earnings and foreign direct investments,” says the Ministry of Finance, Planning and Economic Development in its latest economic performance update.
Some of the new policies being implemented involve the Bank of Uganda buying gold locally to boost the country’s foreign reserves and support the shilling against rapid depreciation.
While the details are not explicitly revealed by the Bank, some reports show that since this started last year, BoU has purchased gold worth 1.5 Billion Dollars.
This is also partly responsible for the growth of gross reserves to 4.3 Billion Dollars in June 2025 (equivalent to 3.8 months of import cover), up from 3.2 Billion as at June 2024, according to Permanent Secretary Ramathan Ggoobi.
Annual diaspora remittances into the country grew by 7.3 percent to 1.4 Billion Dollars or about 5 Trillion Shillings last year, on account of increased inflows mainly from the Middle East.
On the trade side, while the country traded at a deficit of 110.85 Million Dollars in May 2025, this deficit was 15.2 percent and 3.3 percent narrower than it was in May 2024 and April 2025, respectively.
This followed a significant increase in exports in May 2025 that more than offset the increase in the import bill, according to the Ministry.
Particularly, export earnings grew by 36.8 percent to 1.2 Billion Dollars in May 2025, compared to the 876.40 million recorded in May 2024, while the import bill rose 30.1 percent to 1.31 million in May 2025.
Also, whereas the export earnings increased by 6.9 percent from 1,121 million in April 2025 to 1.2 million in May 2025, the import bill increased by 6 percent between the two months, from 1.24 million in April 2025 to 1.31 billion in May 2025.
The strength of the shilling against the dollar is also partly a result of the general weakening of the greenback against several world currencies.
At the region arena, the Ugandan and Tanzanian Shillings posted appreciations of 1.3 percent and 2.5 percent respectively against the US Dollar, according to the update.
The performance of the Tanzanian Shilling is explained by the increased Dollar inflows, particularly from gold exports and tourism.
On the other hand, the Rwandan and Burundi Francs both registered depreciations of 0.6 percent 0.1 percent, respectively, against the US Dollar during the month.
The exchange rate of the Kenyan Shilling against the US Dollar, however, remained unchanged.
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