Middle East war: EAC currencies depreciate against US dollar
On average, the Kenyan shilling, Tanzanian shilling and Ugandan shilling depreciated by 0.1%, 0.3% and 0.7%, respectively, against the US dollar.
The increase in food prices was largely driven by higher prices for oranges, mangoes, Irish potatoes, cabbages and kale (sukuma wiki).
KAMPALA - Currencies across the East African Community (EAC) depreciated against the US dollar in August 2026, partly due to the ongoing conflict in the Middle East, according to Uganda's Ministry of Finance.
The ministry's Performance of the Economy Report for August 2026 says the conflict has increased fuel prices, exerting pressure on demand for the dollar to finance fuel imports.
On average, the Kenyan shilling, Tanzanian shilling and Ugandan shilling depreciated by 0.1%, 0.3% and 0.7%, respectively, against the US dollar.
Similarly, the Burundian franc and Rwandan franc each weakened by 0.2% on average during the month.
The Ugandan shilling depreciated from an average of sh3,704.51 per US dollar in July to sh3,730.25 per US dollar in August, as increased foreign-exchange demand from the energy and manufacturing sectors outweighed inflows from commodity exports, non-governmental organisations and remittances.
The conflict has severely disrupted traffic through the Strait of Hormuz, where a significant share of global oil and gas trade passes.
The strait, which lies between Iran and Oman and links the Persian Gulf with the Gulf of Oman and the Arabian Sea, is a major global energy transit route. The International Energy Agency says around 25% of the world's seaborne oil trade transited the strait in 2025, while LNG passing through it accounted for almost 20% of global LNG trade.
Headline inflation
Excluding Burundi, annual headline inflation increased across the rest of the EAC partner states in August, with the highest rate recorded in Rwanda at 15.9%, followed by Kenya at 6.6%, Tanzania at 4.3% and Uganda at 4.1%.
Burundi's headline inflation declined to 8.4% during the month, from 8.7% in July, while Kenya's increased to 6.6% from 6.5%, mainly reflecting higher food and transport costs.
Transport costs also remained elevated, partly reflecting supply constraints in international oil markets, with diesel and petrol prices per litre rising to KSh219.04 and KSh214.95 in August from KSh172.75 and KSh186.37, respectively, in August 2025.
Tanzania's annual headline inflation increased slightly to 4.3% in August 2026 from 4.2% in July 2026, mainly reflecting high transportation, housing and utility costs, which more than offset the moderation in food inflation.
Rwanda's annual headline inflation rose sharply to 15.9% in August 2026 from 13.8% in July 2026, remaining in double digits for the fifth consecutive month.
The increase was mainly driven by higher food prices, particularly vegetables and meat, alongside continued price pressures from transport, housing-related costs, and restaurant and hotel services.
Annual headline inflation in Burundi eased to 8.4% in August 2026 from 8.7% in July, mainly due to a slower rate of increase in food prices, particularly cereals and vegetables
Headline inflation refers to the rate at which prices of general goods and services in an economy change over a period of time, usually a year.