Tuesday January 2 2018

Foreign exchange reserves reduce

Foreign currency. A bundle of US dollars.

Foreign currency. A bundle of US dollars. Uganda had the highest import cover of 6.4 months of goods and services in June 2006. PHOTO BY RACHEL MABALA 


Kampala. Uganda’s foreign reserve has declined in both volume and duration according to highlights in Bank of Uganda’s monetary policy report for December 2017.

Foreign exchange reserves are official reserves or other foreign currency assets held by a central bank in foreign currencies, used to back liabilities on their own issued currency and to influence monetary policy.
The central bank in the monetary policy report released in December revealed that the stock of Uganda foreign exchange reserves as at December 11, 2017 stood at $3.47 billion (about Shs12.6 trillion). The central bank says this figure is equivalent to covering 5.2 months of future imports of goods.

In the quarter that ended on September 2017, the stock of reserves was $3.55 billion (about Shs12.9 trillion) equivalent to 5.5 months of import cover.
This indicates that volume of foreign exchange reserve declined by $8 million (about Shs29 billion) and the duration it can cover also declined by one month of import cover, showing out flow in the stock of the country’s foreign exchange reserve.

According to the highlights of Bank of Uganda’s December monetary policy report, it purchased $64.3 million (Shs233 billion)for reserve build-up compared to $3.3 million (about Shs12 billion) in October 2017, while targeted sales totalled $13.5 million (about Shs49 billion).
“As at December 13, 2017, net BoU purchases from the Interbank Foreign Exchange Market amount to $260 million (about Shs944 billion) for the FY and $562.2 million (about Shs2 trillion) since January 2017,” said the executive director of research Bank of Uganda, Dr Adam Mugume.
Uganda had the highest import cover of 6.4 months of goods and services in June 2006, with the volume foreign exchange reserve of $2.159 billion (Shs7.8 trillion).