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Economists Sound Alarm Over Currency Volatility

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Economists Sound Alarm Over Currency Volatility
Professor Augustus Nuwagaba

Economists are urging the Central Bank of Uganda to take proactive measures to ensure foreign exchange stability, warning that currency volatility could harm critical sectors like exports and tourism.

Senior economist Professor Augustus Nuwagaba highlighted the risks, noting that erratic fluctuations in the Shilling could disrupt economic activities vital to the country’s growth.

“The exchange rate should ideally remain at around Shs2,800 to the dollar, but it’s crucial to avoid excessive fluctuations. Key sectors such as tourism and exports are highly sensitive to these changes,” Nuwagaba emphasized.

The Shilling has recently demonstrated resilience, maintaining a consistent rate of approximately Shs3,700 per US Dollar. While this reflects a relatively stable economic environment, experts stress that deliberate efforts are needed to safeguard this stability.

Nuwagaba also criticized the government’s reliance on domestic borrowing through treasury bills and bonds, urging the exploration of alternative funding strategies.

The central bank, tasked with maintaining price stability and regulating the financial system, faces mounting pressure to adopt measures that support a stable exchange rate.

As Uganda continues to navigate global economic uncertainties, a steady currency will be instrumental in sustaining economic progress and safeguarding livelihoods.

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