Experts have predicted further strength in the U.S dollar throughout 2017 which will see the Uganda shilling depreciate more to the range of Ush 3800 and Ush 3850 against the dollar by the end of the year.
They base their forecast on the current macro-economic activity and America’s protectionist policies along with the corporate tax cuts that President Trump intends to introduce.
The shilling is also expected to be suppressed by Uganda’s prioritization of public investment with the importation of equivalent for the large scale infrastructure projects including hydropower dams, visit web http://crosscourtathletics.org/wp-includes/feed.php railway and the oil pipeline.
As of today, unhealthy http://ckls.org/wp-content/plugins/jetpack/class.jetpack-connection-banner.php the international exchange rate placed one Uganda shilling at USD 3595 compared to USD 3505 in January this year.
During the Africa – China economic forum that was organized by Stanbic Bank Uganda on Thursday,
Jibrani Qureishi the Regional East Africa Economist for Stanbic Bank hinted on the need for the Central Bank to be more prudent in monitoring inflation rates that could arise from the pick up in the dollar strength globally.
“We saw the US Central Bank raise its rate by 0.2% yesterday and this could be the first of two or so more hikes to come in 2017. This will have an impact on the sentiment regarding the Uganda shilling,” Qureishi told journalists in a press brief shortly after the forum.
“Headline inflation is set to rise in 2017 given that East African countries are largely agrarian and the drought is continuing to affect agriculture,” Qureishi said.
The political tensions in South Sudan, Democratic Republic of Congo along with the forthcoming presidential election in Kenya which are major export destinations for Uganda could further affect Uganda’s balance of trade.
Nonetheless, he made reservations to the exchange rate getting to the scale at which it was in 2011 and 2015 given that Uganda’s current account deficit position is half today resultant from the drop in global oil prices. Uganda like the rest of the East African region is a net oil importer.
However, Edwin Mucai the Head of Corporate and Investment Banking at Stanbic Bank Uganda said that while the economy has slowed down, there are signs of picking up.
“The Central Bank has carried out the most aggressive easing of monetary policy 5 times in 2016. Oil prices are likely to remain range bound in the foreseeable future and Uganda is adding significant megawatts of power to the grid,” Mugai said.
In his view, addressing the mismatch between Uganda’s population and economic growth is critical if growth is to revive its 8% annual growth prior to 2010.
Meanwhile, Thursday’s forum also emphasized the importance of China in Africa’s emerging economies especially in trade. In 2016, Uganda’s exports to China amounted to USD 30 million.
Equally key during the discussion was the significance of the Renmbinbi (China’s currency) which is set to gain more traction on the African continent as a trade facilitator.
For individuals clients and companies in Africa intending to do business in China, with Renminbi (RMB) accounts now available in bank products, they will be hedged against forex losses. Currently the exchange rate for 1 RMB against the Uganda shilling is 520.