The Central Bank of Uganda considers the Rwandan franc (Rwf) and DRC franc (CDF) as politically hinged and less significant currencies that are not healthy for business in Uganda.
Director of Communications at Bank of Uganda (BOU), Kenneth Egesa told journalists that the central bank prefers not to invest in any updates on the value and performance of the two currencies.
Egesa explained that the Rwanda and DRC currencies are very volatile attributed to a combination of economic, regulatory, and practical factors.
He noted that these two currencies (RWF and CDF) are historically more unstable than major global currencies.
“By limiting updates on these currencies prevents unnecessary market fluctuations that could affect Uganda’s financial environment,” according to Egesa.
Egesa added that providing updates on these currencies could also signal instability in neighboring economies, potentially discouraging trade and investment.
He emphasised that the Central Bank of Uganda prioritises updates for major currencies and not less significant currencies which might detract from the central bank’s more pressing priorities, such as managing the exchange rate of the Ugandan Shilling (UGX) against dominant currencies like the US dollar and Euro.
According to him, another factor is the regulatory landscape, saying, Uganda’s economic relationships with Rwanda and the DRC are influenced by political and economic cooperation agreements.
Thus providing updates on Rwanda and DRC currencies could be perceived as interfering with regional monetary policies or complicating diplomatic relations.
“Each country maintains its own monetary regulations, and BOU prefers to leave the responsibility for updating forex rates to the central banks of Rwanda and the DRC,” Egesa noted.
Egesa also attributed to BOU decisions to low demand of the two currencies, “there is limited interest in the RWF and CDF among Ugandan traders and investors compared to major international currencies.”
He added that data collection and analysis required for less commonly traded currencies might not justify the cost, especially given their relatively low economic impact on Uganda.
On the other hand Egesa acknowledged that obtaining accurate forex rates for the RWF and CDF can be difficult due to lower market activity and varying standards in reporting by Rwanda and the DRC’s central banks.
This could lead to inconsistencies in the information provided.