Shilling strengthens slightly ahead of July inflation numbers

The local currency closed at 3750 / 3760 compared to opening levels of 3770 / 3780. The appreciation of the shilling was mainly driven by subdued dollar demand in the interbank market, alongside sizeable dollar inflows from remittance companies as we approach month-end.

The Uganda Bureau of Statistics (UBOS) will be releasing July inflation numbers on Friday. Analysts say the inflation outlook could determine how the local unit trades in the next few weeks.

“Markets are awaiting inflation numbers where an acceleration is widely expected, driven mainly by high fuel costs. The local unit is expected to extend losses. The ongoing energy shock will continue to limit the shilling upside potential in the near term as the economy adjusts to this market disruptor,” Stephen Kaboyo, managing director at Alpha Capital, said.

Uganda’s annual headline inflation rose slightly to 3.7% in June 2026, up from 3.2% recorded in May, according to the latest Consumer Price Index (CPI) data released by UBOS.

In the debt market, the Bank of Uganda was active in the market, mopping up sh399b through its 3-day repo instrument. Bank of Uganda will return to the market on Wednesday to conduct a Treasury Bond auction where the benchmark 2-year, 5-year, 15-year and 25-year bonds will be reopened.