Uganda Exporters are gnashing their teeth in frustration at the gains the Uganda Shilling has made against the US dollar in the past two months.
The New Vision Uganda Newspaper reported that a combination of pre-election jitters, uncertainty in the Euro zone, and less than usual export receipts at the beginning of 2011 conspired to push the Uganda shilling to historic lows against the US dollar and other major currencies.
At the beginning of September, the shilling crossed the sh 2900 mark on the inter-bank market and it actually touched sh3500 at some Forex Bureaus. Since then, the Uganda shilling has gained dramatically against the dollar to just over sh2400 in the inter-bank market by Monday 12th December 2011.
The double digit dollar appreciation has impressed importers, who had protested vehemently against the earlier loss of value by the local currency so much that they suggested that the Central Bank of Uganda fix the rate at a more favorable level.
Inflation too was hitting record heights topping off at 30.4 percent in October, the highest since 1993.
In scrambling to curb inflation, the bank of Uganda started aggressive efforts to mop up excess cash by stepping up its treasury bill and bond auction and by raising the Central Bank Rate to reduce borrowing and therefore money circulation.
While the appreciation of the shilling is making good business sense for the Importers, the Exporters are saying they are getting less for each shilling spent because the bank lending rates have remained high and as well as the inflation.