Joseph Mawejje, Research Analyst EPRC T he Uganda shilling has steadily lost value against the dollar over the last year. By the second week of March 2015 the dollar equivalent in Uganda shillings had hit the 3,000 mark up from about 2,500 Uganda shillings only a year earlier, signifying 20 percent depreciation. This trend can be explained by the strengthening of the dollar globally and weak economic fundamentals domestically. While we cannot control the global exchange rate movements, we can surely influence domestic policy. For this reason therefore, I will focus on the domestic economic fundamentals in the discussion that follows. Uganda liberalised the exchange rate market in the early 1990’s as part of wider economic reforms. Since then exchange rates are determined by purely demand and supply forces. The central bank only occasionally intervenes to smoothen out volatile movements.  On the supply side, foreign exchange inflows are determined through exports, official devel