Ugandan Shilling Depreciates Against Kenya Shilling as Importer Demand for Dollars Escalates

The Ugandan shilling renewed weakness against the Kenyan shilling during the week ending October 22, 2026, reversing a short-lived recovery earlier in the month.

According to the latest monetary report published by the Central Bank of Kenya (CBK), the exchange value rose to 32.26 Ugandan shillings per Kenya Shilling on October 22, up from 30.46 on October 15, boosting the relative purchasing strength of the Kenyan currency across cross-border commercial channels.

Key Takeaways from the CBK Financial Update

Cross-Border Exchange Movement: The weekly average exchange rate shifted from 31.40 Ugandan shillings per Kenyan shilling in the period ending October 15 to 31.89 in the week ending October 22.

Bank of Uganda Policy Interventions: In response to currency depreciation and rising inflation, the Bank of Uganda raised its Central Bank Rate by 225 basis points to 12.0 percent on October 14, followed by direct foreign exchange market interventions on October 22.

Kenya Shilling Stability: The Kenya Shilling held steady against the U.S. Dollar, trading at Ksh129.91 on October 22 compared to Ksh129.81 the previous week.

Foreign Reserves Buffer: Kenya’s usable foreign exchange reserves remained robust at USD 14.693 billion (Ksh1.908 trillion), equivalent to 5.9 months of import cover—well above the statutory minimum threshold.

Exporter Exposure: Depreciation of the Ugandan currency increases import costs for Ugandan buyers sourcing Kenyan goods, potentially impacting bilateral trade, which totaled approximately Ksh162.4 billion in 2025.

Uganda remains one of Kenya’s primary regional export destinations, consuming significant volumes of manufactured goods, pharmaceutical products, building materials, and refined fuel.

A weaker Ugandan currency forces Ugandan importers to spend more local money to settle invoices denominated in Kenyan shillings or U.S. Dollars. Regional trade analysts warn that persistent exchange volatility could lead to higher wholesale landed prices in Kampala, prompting cross-border traders to renegotiate credit terms and order volumes.

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