The Uganda Shilling has made significant strides in the past year, emerging as the best-performing currency in Africa.
According to data tracked by Bloomberg, the Shilling has appreciated by an impressive 6.1%, outperforming 23 other currencies across the continent.
The Ministry of Finance has credited several factors for the Shilling's robust performance, with one of the key contributors being a higher inflow of US dollars from portfolio investors.
This influx of foreign capital has more than offset the demand for the US dollar from corporate sectors, resulting in the Shilling strengthening against other currencies.
In a detailed report published in February 2025, the Ministry of Finance highlighted that this increased foreign exchange inflow has not only stabilized the Shilling but has also contributed to its exceptional performance compared to other African currencies. The positive impact of portfolio investments, coupled with a favorable balance between demand and supply of foreign currency, has helped Uganda maintain its economic stability.
Experts suggest that the ongoing strength of the Shilling is a sign of investor confidence in Uganda's economy, which has seen improvements in areas like inflation control and economic growth.
The appreciation of the Shilling also provides a boost to local businesses, making imports cheaper and giving consumers more purchasing power. However, experts also caution that maintaining the Shilling’s strength will require continued efforts in managing foreign exchange flows and ensuring stable economic policies.
As Uganda continues to experience this positive trend, the government’s focus on attracting more foreign investment is expected to further support the Shilling’s upward trajectory in the coming year.
