Hi steemians,
today, I want to highlight about the falling prices of the shillings currency in Uganda, could it be connected to cryptocurrency??? I do not think so. The Uganda budget still has a lot to be efficient and effective.

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Not only are cryptocurrency prices falling but also our traditional currency, the Uganda shillings! The Uganda shilling way back in 2007 saw a serious drop during the time of the Kenyan post election crisis. The The Uganda shillings has proven to fall in the current recent times because of the rise in the fuel prices. It is known that fuel is the main back bone of industry and factory progression and Uganda is one of the great consumers of fossil fuel i.e., oil.

The prices in fuel such as petrol have ever averaged to Ug Shs 5000 for a single litre and Ug Shs 4000 as for diesel. Back then, the rise in the prices of fuel had been supported tremendously by the insufficient supply of fuel needed in the market all by the main kenyan route.

Today, in 2018, as the year has seen great heights in the prices of fuel such as petrol and diesel that are in great consumption, the petrol prices are at a tremendous rise as was seen in the year 2007 and are still rising. The current price of petrol today is at Ugx 4210 and diesiel at Ugx 3800 almost the price of one American dollar.

The rise in these prices has been brought about by the two main prevailing factors and these are;

1. The Global price of oil.

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Oil, seen in the past recent years, has been a great essential for developing countries like Uganda as it is the main bi product of production in industries for the efficient running of machines. The Global oil price is the price at which oil is being sold before it is refined into other fuels like petro and diesel.

2. The continuous depreciation in the Ugandan shilling.

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In not more than a year, Uganda will be one of the major exporters of oil as oil resources were recently discovered in and around the shores of L. Albert, western Uganda making Uganda a known producer of oil. But util then, Uganda will be and still a net importer of fuel.

Literally, the role of the shilling is to make sure that fuel imported from other countries finds its way to fuel stations such as Shell, Cobil, Total, and the rest of the stations in the country.

Uganda is buying fuel in dollars (American) from sellers in the Middle East through port Mombasa in Kenya the neighboring country before it gets home.

The current situation in Uganda shows that Ugandans need more shillings to buy the same amount of fuel they needed as was seen back then in 2007.

A litre of petro back in 2007 was at Ugx 3,500

Why has this been the issue.

There has literally been pressure on the shilling as a currency which has been caused by the continued demand of imports and also the global dollar weight which has made the shilling have a weaker current amount position.

The demand for imports has offset the growth in exports which has made the exchange rate to depreciate over the last few months hence making it come under pressure.

There has been a great deficit as seen in the last month as imports (goods brought into the country) were valued at $1.2b (Shs 4.6 trillion) whereas exports were valued at $915m ( Shs 3.5 trillion) with all this being caused by the the rise in the price of imports hence increasing in the excess demand of the dollar.

The implications.

If there is no solution as soon as possible, there will be literally a great impact on fuel prices and this could lead to a flow with a light rise effect on the Ugandan economy.

There are more other effects that lead to the free fall in the value of the shilling. One other thing is inflation! This has been a case for the past years and there seems to be no solution. Today, the high rate of inflation is being caused by the high value charged on imports which is twice the price of the value charged on exports.

This is not good in any manner or degree to the Ugandan economy and we are hoping things to change for the better.