DEVALUATION – WHILE TOURISTS SMILE THE LOCALS CRY
When the Uganda Shilling hit a record low of 2.500 versus one US Dollar over the weekend, foreign visitors had reason to smile for getting a lot more out of their hard currency transactions, allowing them to spend more freely and spread more shillings into the local shops and souvenir markets. On the other hand, locals are bracing themselves for another round of fuel price increases, as the low value of the shilling inevitably reflects on the cost of the next shipment of fuels into the country, driving pump prices up.
At the same time did the Uganda Bureau of Statistics release new data, which showed a rise in hotel and restaurant food prices by over 18 percent for the last year, a significant increase across the board, explaining why fewer locals now have the ‘taste’ to go out as often as they used to do. Prices for beers and soft drinks too have risen correspondingly and the devaluation trend in the entire East African region has economists and central banks worried, the latter blaming speculators for the sharp fall in currency values in recent weeks while economists in part blame trade deficits and imbalances, calling for more exports to match the earnings what countries spend in imports.
Watch this space.