Uganda’s central bank said Wednesday that the country has experienced portfolio outflow from government securities as a result of the increased interest rates in advanced economies.
Michael Atingi-Ego, deputy governor of the Bank of Uganda (BOU), said the country has had an impact resulting from the tightening of monetary policies in advanced economies, which leads to the increase of interest rates in those economies.
BOU figures showed that offshore government securities holding was about 3.7 trillion shillings (about 1 billion U.S. dollars) by the end of 2021, but currently, it is about 2.1 trillion shillings, meaning 1.6 trillion shillings exited.
This has exerted pressure on the exchange rate, according to Atingi-Ego. “Our capacity to buy reserves or foreign currency from the market has been constrained by capital outflow.”
BOU in its monthly monetary policy report for December said several factors including the increase of interest rates in developed economies are likely to constrain the country’s economic growth. Enditem
