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EAC currencies register mild depreciation against US dollar
The Ministry of Finance Performance of the Economy Report for May 2026 indicates that these mild depreciations reflected the impact of geopolitical tensions and the conflict in the Middle East on foreign exchange markets.
EAC currencies register mild depreciation against US dollar
By: Umaru Kashaka, Journalist @New Vision
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Currencies within the East African Community (EAC) generally registered mild depreciations against the US dollar during May 2026, a Ugandan government report says.
The Ministry of Finance Performance of the Economy Report for May 2026 indicates that these mild depreciations reflected the impact of geopolitical tensions and the conflict in the Middle East on foreign exchange markets.
On average, the Kenyan Shilling and Tanzanian Shilling depreciated by 0.05% and 0.2%, respectively, against the dollar.
Likewise, the Burundi Franc and the Rwanda Franc each weakened by 0.1% on average during the month.
Among the EAC currencies, the Uganda Shilling recorded the largest depreciation against the dollar, declining by 1.3% over the review period, trading at an average mid-rate of sh3,764.11 per dollar compared to sh3,716.70 per dollar in April 2026.
In finance and forex, mid-rate is the exact midpoint between the buying and selling price of a currency.
“The weakening of the Shilling was primarily driven by increased demand for the dollar by traders to meet higher energy import and freight costs amid continued geopolitical tensions in the Middle East, coupled with reduced forex earnings in the month of April 2026,” says the report.
The Monetary Policy Committee of the Bank of Uganda maintained the Central Bank Rate (CBR) at 9.75% in May. The CBR is the rate at which Bank of Uganda lends to commercial banks, which in turn lend to the public on interest.
While acknowledging the inflationary risks associated with developments in the Middle East, the Committee assessed that the current monetary policy stance remains appropriate and consistent with prevailing macroeconomic conditions.
Among the EAC currencies, the Uganda Shilling recorded the largest depreciation against the dollar, declining by 1.3% over the review period, trading at an average mid-rate of sh3,764.11 per dollar compared to sh3,716.70 per dollar in April 2026.
In finance and forex, mid-rate is the exact midpoint between the buying and selling price of a currency.
“The weakening of the Shilling was primarily driven by increased demand for the dollar by traders to meet higher energy import and freight costs amid continued geopolitical tensions in the Middle East, coupled with reduced forex earnings in the month of April 2026,” says the report.
The Monetary Policy Committee of the Bank of Uganda maintained the Central Bank Rate (CBR) at 9.75% in May. The CBR is the rate at which Bank of Uganda lends to commercial banks, which in turn lend to the public on interest.
While acknowledging the inflationary risks associated with developments in the Middle East, the Committee assessed that the current monetary policy stance remains appropriate and consistent with prevailing macroeconomic conditions.