The recent auction of government securities by the Bank of Uganda has attracted offshore investors who had previously withdrawn from the domestic market, helping to strengthen the Shilling against the US dollar, the Central Bank Governor, Dr Michael Atingi-Ego, has revealed.
Atingi-Ego made the revelation while appearing before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on Tuesday, November 10, 2026, following concerns raised by the committee chairperson, Muwada Nkunyingi, over the state of the economy and the rising dollar exchange rate.
“One of the challenges we are seeing in this country is with the economy. The dollar rate has gone high and things have become expensive. It is the Bank of Uganda that can assist us to understand whether there is hope of managing inflation and commodity prices, among others,” Nkunyingi said.
In his response, Atingi-Ego attributed the depreciation of the Shilling partly to the US Federal Reserve’s decision to increase its policy rate, which made investments in US dollar-denominated assets more attractive compared to those in Uganda.
“We saw a number of non-residents holding Uganda government securities beginning to sell off these securities to buy dollars in the market. This added depreciation pressures on the currency, where we saw it move up to nearly Shs4,500,” Atingi-Ego said.
He told MPs that the Bank of Uganda subsequently raised the Cash Reserve Ratio (CRR) from 11 per cent to 13.5 per cent. The CRR is the minimum proportion of customer deposits and other liabilities that commercial banks are required to maintain as reserves at the Central Bank.
“We were able to pull in close to Shs1.3 trillion. We also made it expensive for commercial banks to access liquidity facilities from the Central Bank by raising the Central Bank Rate on October 14, 2026, from 9.75 per cent to the current 12 per cent, an increase of 225 basis points,” he added.
Atingi-Ego said the measures helped improve the performance of government securities, making them more attractive to investors and contributing to the Shilling’s recovery from nearly Shs4,500 to about Shs4,050 against the dollar.
He said the renewed investor confidence was reflected in a recent government securities auction, where offshore investors returned to the market following an increase in yields.
“We had an auction the other week where government had offered Shs1.4 trillion, and because of the upward shift in the yield curve, we saw a return of the offshore players into our market to buy government securities. They bought in excess of Shs200 billion and, as a result, we saw some dollar inflow in the market,” Atingi-Ego told MPs.
However, the Governor cautioned that the Central Bank’s interventions were short-term measures that could not sustainably address the underlying economic challenges.
He urged legislators to push for the implementation of the government’s tenfold growth strategy, saying it would strengthen the economy through increased production, exports and value addition.
“We need to increase the export of goods and services. The key pillars of the tenfold growth strategy include agro-industrialisation, tourism development, mineral development, science, technology and innovation, all of which support value addition on our raw materials,” Atingi-Ego said.
Meanwhile, Budadiri County East MP Julius Nakiyi (NRM) backed the Governor’s call for value addition, particularly in the agricultural sector, saying processing locally produced commodities such as coffee could significantly increase Uganda’s export earnings.
“I read a report by the Uganda Coffee Association which said that if we do not increase coffee production, but rather maintain the same amount being produced today, coupled with value addition, Uganda’s income can multiply by three times from the current Shs2.4 billion to about Shs6 billion,” Nakiyi said.
He also urged government to increase funding to the coffee sector to boost production and support the industry’s growth.
