Bank of Uganda Raises Cash Reserve Requirement to 13.5%

The Bank of Uganda raised the cash reserve requirement for commercial banks from 11.0% to 13.5%, effective September 24. The central bank implemented the shift to counter a sharp decline in the Ugandan shilling, which recently reached its lowest level since February 2024, trading near 3,925 per dollar.

Currency weakness resulted from increased demand for U.S. dollars by manufacturers and energy-sector firms facing higher fuel costs tied to conflict in the Middle East. The bank stated the adjustment is intended to support prudent liquidity management and enhance the effectiveness of monetary policy transmission.

Executive Director Adam Mugume rejected calls for direct intervention through dollar sales, describing such a move as "policy inconsistency." Mugume maintained that policymakers have sufficient tools to manage exchange-rate volatility without resorting to direct market sales.