Central Bank clarifies on falling shilling
Aug 08, 2011
THE Bank of Uganda (BoU) has said the depreciation of the shilling by 10% over the last two months does not relegate it to the worst performing currency.
By SAMUEL SANYA
THE Bank of Uganda (BoU) has said the depreciation of the shilling by 10% over the last two months does not relegate it to the worst performing currency.
“Exchange rate depreciation per se is not inherently bad, or a sign of poor performance. Sometimes it is necessary and desirable for exchange rates to depreciate, to allow economies to adjust to external shocks,†explained Louis Kasekende, the bank’s deputy governor, in a statement yesterday.
He was responding to reports in a local newspaper that the high demand and low supply of the dollar in Uganda has seen the shilling lose value at a rate higher than other world currencies, making the shilling the worst performing currency globally.
“Exchanges rates are inherently volatile; this is as true for the Uganda shilling as for most other currencies. The South African rand, for example, is a very volatile currency,†added Kasekende.
He said even if it was true that the shilling had depreciated against the US dollar, this would not make it the world’s worst performer.
Kasekende’s full statement will run in the New Vision tomorrow.
THE Bank of Uganda (BoU) has said the depreciation of the shilling by 10% over the last two months does not relegate it to the worst performing currency.
“Exchange rate depreciation per se is not inherently bad, or a sign of poor performance. Sometimes it is necessary and desirable for exchange rates to depreciate, to allow economies to adjust to external shocks,†explained Louis Kasekende, the bank’s deputy governor, in a statement yesterday.
He was responding to reports in a local newspaper that the high demand and low supply of the dollar in Uganda has seen the shilling lose value at a rate higher than other world currencies, making the shilling the worst performing currency globally.
“Exchanges rates are inherently volatile; this is as true for the Uganda shilling as for most other currencies. The South African rand, for example, is a very volatile currency,†added Kasekende.
He said even if it was true that the shilling had depreciated against the US dollar, this would not make it the world’s worst performer.
Kasekende’s full statement will run in the New Vision tomorrow.