Financial Markets in Uganda
Bank of Uganda issued a 5 year Financial Markets Development Plan 2008-2012.
1. The Forex market
At present the forex market has the following participants: 1. The Bank of Uganda 2. The inter-bank market (where commercial banks trade with each other). 3. The Forex Bureaux (that act as money shops) 4. Retail customers or end users of forex
Foreign exchange policies in Uganda over the years:
Prior to 1993 Uganda had a controlled foreign exchange regime and a wide variety of foreign exchange policies under this period. They were as follows:
A par value of 0.124414gram of gold per Uganda shilling was maintained.
The Uganda shilling was pegged to the dollar at a rate of Shs. 7.14286
The shilling was pegged to the SDR at Shs. 9.66 due to volatility of the dollar.
The shilling was floated. This saw the rate drop to Uganda shillings 76.97 to a dollar form Shs.8.1453
A dual exchange rate regime was introduced and foreign exchange was auctioned through a system known as Window 1 and Window 2. Window 1 was for financing priority imports and the rate was determined daily taking into account the value of the dollar against other currencies and the economic conditions in the country. Window 2 was for financing non-priority imports
The auction system was replaced by allocation based on a rate of Shs.1470 to a dollar. That same year the dual exchange rate was re-introduced at a fixed rate of Shs. 1400 to a dollar.
In May 1987 the shilling was devalued by 66% from shs. 14 to 60. This was after the currency reform.
Forex Bureaus were introduced.