Uganda Central Bank Raises Reserves, Shilling Slides

The Bank of Uganda will raise the cash reserve requirement for commercial banks from 11% to 13.5% beginning Sept. 24, tightening liquidity by requiring banks to hold more deposits at the central bank. The move follows a nearly 6% slide in the Ugandan shilling against the dollar, with the currency trading near 3,930 per dollar and potentially approaching the 4,000 level. Officials and analysts cited stronger dollar demand from manufacturers, telecommunications and energy companies, as well as Middle East tensions, oil-supply concerns and reduced investor appetite for Ugandan debt. The central bank said the measure is intended to improve liquidity management, strengthen monetary-policy transmission and support price stability, though reduced liquidity could constrain bank lending and investment. The action follows a separate reserve-ratio increase in May and comes as annual inflation remains below the central bank’s target, despite sharply higher energy, fuel and utility costs.