Uganda Currency Plunges as Anti-Gay Law Prompts U.S. CutsEric Ombok
Uganda’s shilling slumped to the lowest level in 15 months after the U.S. government said it was cutting aid to the East African nation over a February law that toughened punishment for homosexual acts.
The currency fell 1 percent to 2,616.50 per dollar by 5:11 p.m. in the capital, Kampala, the lowest since March 2013. The shilling slumped 6.4 percent since President Yoweri Museveni signed the bill on Feb. 24, the most after Ghana’s cedi among 24 African currencies monitored by Bloomberg. That’s a reversal of the first seven weeks of the year, when it rallied 3.1 percent.
The U.S. is discontinuing or redirecting funds for programs in Uganda, where life sentences can be imposed for some homosexual acts, the National Security Council said last week, without giving an amount. Norway, Denmark and Sweden also redirected or withheld aid and the law has forced people to flee the country or go into hiding, Human Rights Watch and Amnesty International said last month.
The shilling weakened “because of the negative sentiment after the U.S. announced they are cutting off donor funding,” Joseph Mwanguo, head of treasury at NIC Bank Uganda Ltd. said by phone today. “There will definitely be reduced inflow of dollars.”
The reduction in aid, which was announced on June 19, will impact people that the U.S. “purports to support and aims to protect,” the Ugandan government said in an e-mailed statement a day later.
Market sentiment “that there will be shortage of dollars” after the U.S. announcement came at a time when there was a lack greenback supplies in the market, Ahmed Kalule, a currency trader at Bank of Africa Uganda Ltd., said by phone from Kampala.