Uganda shilling continues to strengthen against US dollar

KAMPALA - The Ugandan shilling continued strengthening against the US dollar in June 2025, trading at an average mid-rate of sh3,605.84 per dollar, compared to the previous month’s sh3,653.40.

The shilling thus resulted in a 1.3% appreciation, the finance ministry performance of the economy June 2025 report says.

Financial experts say a stronger shilling may lead to reduced import costs and enhance purchasing power for foreign goods and services, and potentially contribute to lower inflation.

The ministry’s report indicates that on an annual basis, the shilling appreciated by 2.7% against the dollar in the financial year 2024/25 compared to the financial year 2023/24.

The average mid-rate for the shilling against the dollar was shillings 3,778.61 per dollar in the financial year of 2023/24, declining to 3,676.21 per dollar in the financial year of 2024/25.

The relative strengthening of the shilling against the dollar in the financial year 2024/25 was largely due to some financial market reforms that reduced demand for the dollar, increased remittances, offshore portfolio investments, export earnings and foreign direct investments.

Elsewhere in the East African region, the Tanzanian shilling posted an appreciation of 2.5% against the dollar.

The performance of the Tanzanian shilling is explained by the increased dollar inflows, particularly from gold exports and tourism.

On the other hand, the Rwandan and Burundi Francs both registered depreciations of 0.6% and 0.1%, respectively, against the dollar during the month.

The exchange rate of the Kenyan shilling against the dollar, however, remained unchanged.

The US dollar is the world’s primary reserve currency, meaning it is held by central banks around the world in large quantities as part of their foreign exchange reserves, according to experts.

Experts also say the dollar is the main currency used in international trade, with around half of world trade invoices done in dollars. 

Worst performance since 1973

The dollar index, which tracks the greenback’s value against a basket of six major currencies, including the British Pound Sterling, Euro, and Japanese Yen, plummeted 10.8% in the first half of 2025. This marks its worst start to a year since 1973 and the sharpest half-year decline since late 1991.

The US dollar is expected to remain weak due to pressures from President Donald Trump tariffs, debt, and rate cut expectations.