A weaker pound means a strong Uganda shilling. For those in the UK it is good because they can get more shillings from the pounds they send to Uganda. So Ugandans in the UK in particular win. Winners too are their families/friends /relatives who receive funds from the UK.
Other winners are UK exporters and Ugandan importers (due to identity relationship). UK exporters are winners because it is cheaper to send they products to Uganda. Ugandan importers win because it is relatively cheaper to import goods from the UK now that the it takes fewer shillings to buy pounds. Now is the time for Ugandan importers to purchases their dream products from the UK. Ugandan tourists/visitors-those lucky enough to get visas-to the UK are also big time winners.
But there are also losers. The biggest losers are Ugandan exporters in that Ugandan products are now more expensive in the UK due to a weaker pound. UK importers and travelers are also losers because it is now more expensive to import stuff into the UK or travel abroad because the pound fetches less of other currency.
Overall, it is hard to say whether Uganda is better off with a strong shilling/weaker pound. Why? Because it depends on whether Uganda has more exporters and visitors to the UK or more importers and tourists/visitors from the UK. But a stronger shilling is not in Uganda’s long term economic interest. The value of the currency should reflect overal economy wide fundamentals. It is hard to tell for Uganda. Yes, the macro economic fundamentals are okay, but the micro aspects are not that good.
This may account for the disparity you allude too on the ground in Uganda. But for the folks who travel to Uganda, it is certainly cheaper if you bought the tickets in Uganda.
Why is there still a huge disparity between the pound and the Euro? Because there are interest rate differentials between UK and the EU. The EU has cut further than the UK. That should be the fundamental factor. For those investors seeking for some relief, they are pouring their money into the UK and fleeing the Euro zone.
In Uganda too the pound is better known-more in use-than the Euro so it may have to do with sentimentality and the overal fundamentals of the Ugandan economy.
WBK
