BOU speaks out on Shilling, lending rates

Bank of Uganda says it cannot control the exchange rate changes.

This comes at a time when the exchange rate fluctuations have been highlighted as a major factor affecting the performance of the economy with the latest being the Uganda Revenue
Authority revenue collections deficit.

Similarly the weakening of the shillings experienced in the last two weeks contributed to the hiking of fuel prices

The export promotions board has asked the Bank of Uganda to explain how best the shillings could be managed because it also affected exports.

However Bank of Uganda says it has no control over the exchange rate because it’s a free market.

The Governor Emmanuel Mutebile says the Central Bank can only come in when the Shilling has sharply fallen in value.

Meanwhile, Mutebile says commercial banks still have a long way to go in the cutting of lending rates.

He says much as there has been some reduction in lending rates by commercial banks, the rate at which the cuts are made is low compared to the cuts of the central bank rates.

The Central Bank rate has been reduced by a big margin of 10 percentage points compared to 2 percentage points by commercial banks.

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