What Is the UGX (Ugandan Shilling)?
UGX is the currency code for the Ugandan shilling, the national currency for the Republic of Uganda, although the symbol USh is used to represent the currency locally. Up until 2013, the Ugandan shilling was divisible into 100 cents. After 2013, the shilling became is the smallest unit of currency used and cents were abandoned.
Revaluation of the currency occurred in 1987. As of February 2021, 1 U.S. dollar is equal to around 3,660 UGX.
- The Ugandan shilling trades under currency code UGX, and is the official currency of the African nation Uganda.
- UGX is a free floating currency, first issued in 1966 and then revalued at a rate of 100:1 for the new Ugandan shilling in 1987.
- Agriculture drives the indebted Ugandan economy, with coffee being one of its primary export.
Understanding the Uganda Shilling (UGX)
Prior to 1966, the East African Currency Board handled monetary policy for the nation and the country used the common East African shilling as currency, along with several neighboring countries. With the creation of the Bank of Uganda (BoU) in 1966, financial decisions transferred to the new central bank, and the nation introduced the country’s first official currency.
The Bank of Uganda is the only entity with the right to mint, distribute, or destroy currency in Uganda. Coins have denominations of one, two, five, 10, 50, 100, 200, 500, and 1,000 shillings, while banknotes have denominations of 1,000, 2,000, 5,000, 10,000, 20,000, and 50,000 shillings.
The first issue Ugandan shilling (UGS), was introduced in 1966 and replaced the East African shilling at par. In 1987, the government issued a new shilling which received the currency symbol of UGX. The new shilling was valued at 100 old shillings. The Ugandan Shilling is floating against other currencies.
In 2010, the Bank of Uganda circulated an issue of shilling banknotes with enhanced security features and images depicting the nation's history and culture. Although the new shilling is a stable currency and used in most financial transactions in Uganda, the U.S. dollar (USD), Great Britain pound (GBP), and the euro (EUR) also see use in the nation.
Uganda's History in Brief
Uganda is a landlocked nation in East Africa in a region known as the African Great Lakes region. The country has a highly diverse population consisting of dozens of individual ethnic groups. It boasts fertile land which is rich in natural resources. This lush landscape may explain why it was dubbed “the pearl of Africa” by Winston Churchill after he visited the region while the country was under British rule. The nation’s economy is primarily based on agriculture.
The area was a British protectorate between 1894 and 1962, when they gained independence. Following independence, the nation experienced a time of civil war and other conflicts including a six-year guerrilla war. These conflicts caused many deaths. A disagreement between tribal groups within the government and the Buganda kingdom marred the early years of independence. This instability within the government led to a military coup in 1971 led by Major General Idi Amin. Amin's dictatorship carried out mass murders, and many fled the country.
The restoration of legal rule came in 1979 when neighboring Tanzania assisted exiles in overthrowing the dictator. Ongoing party disputes within the nation's governmental structure and corruption have continued to handcuff the country's growth.
In 2012, the European Union (EU), Germany, United Kingdom, and other countries removed aid to Uganda after the embezzlement of $13 million in donated funds which were meant to help the nation's most impoverished region. Many nations condemn Uganda's poor record on human rights, torture, and child labor practices.
The Ugandan Economy
Agriculture is the most significant economic earner for Uganda, with coffee being one of the primary crops. Most of the population are subsistence farmers. The country has oil and gas resources, but they contribute little to the economy. The people of Uganda are one of the poorest in the world, which has led to under education.
According to World Bank data, Uganda is a heavily indebted country. The country experienced 2.9% annual inflation in 2019. Uganda's gross domestic product (GDP) growth rate was 6.8% in 2019 but only 2.9% in 2020 due to the COVID-19 pandemic.
UGX in Forex Trading
Assume that the USD/UGX rate is 3,671. This means it costs USh3,671 to buy one USD. If the rate were to increase to 3,900, that would mean the UGX has lost value relative to the USD, since it now requires more UGX to buy one USD. If the rate were to drop to 3,500, it would take fewer shillings to buy a USD, so the UGX increased in value.
To find out how many US dollars a single shilling will buy, divide one by the USD/UGX rate. This produces a number of 0.00027, which is the UGX/USD rate.
If the EUR/UGX rate is 4,008, that means it costs USh4,008 to buy one euro.