Despite performing well since December, the Ugandan currency is facing a new threat

The Bank of Uganda has warned that rising external finance demand will put pressure on the Ugandan shilling, which has been relatively stable since the beginning of the year. Prior to December, the shilling had significantly depreciated and was worth around Shs3,700 per dollar. According to a recent report from The Monitor Uganda, a Ugandan-based news platform, it began at Shs3,757.42 per dollar and closed at Shs3746.08 yesterday. The Bank of Uganda did not specify which funding demands would affect the shilling, but it has previously stated that debt payments and loan repayments were putting pressure on the unit. Yesterday, while delivering the Bank of Uganda's Monetary Policy Report for April in Kampala, deputy governor Michael Atingi-Ego stated that rising external funding needs are expected to put pressure on the shilling, possibly causing it to weaken. This month, the shilling has been volatile in relation to the dollar, owing in part to ongoing capital outflows and debt defaults. The Bank of Uganda also stated that the Central Bank Rate will remain at 10% in order to promote both money supply moderation and economic recovery. Nonetheless, Dr. Atingi-Ego cautioned that, while important, adverse risks to economic growth, such as slower-than-expected growth hurting export demand, higher interest rates, and cost-of-living pressures, could have a significant impact on household spending and private sector investment.