NSSF converts dollar holdings to shillings as currency gains

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The National Social Security Fund (NSSF) is now converting much of its cash holdings from dollars into Uganda shillings to avoid foreign exchange losses and support domestic stability, Patrick Ayota, the NSSF managing director, said.

Speaking during the East Africa Capital Markets Conference in Kampala, Ayota said the local currency’s resilience against the dollar has forced the fund to rethink its traditional exposure to foreign currency.

“Right now, our currency of safety is the Uganda shilling. In fact, we are trying to move as much of our money into the shilling as we can, so we don’t have FX exposure. The shilling is strengthening,” he said.

Ayota noted that the recent inflow of dollars into the market created an unusual situation where holding foreign currency briefly became a liability for the fund.

“On Friday, we had an inflow of dollars, and we were debating whether to convert immediately. We changed everything to Uganda shillings that day. If we had waited until Monday, when the rate moved from 3,440 to 3,410, we would have lost 30 shillings per dollar just by waiting,” he said.

By close of trading on October 17, the local currency was trading at 3460/3470 buying and selling respectively. The unit opened the year at about 3680/3690 levels.

Despite the heightened global uncertainty, particularly in the second half of the year, the Uganda shilling strengthened against the US dollar, appreciating by an average of 2.7% over FY 2024/25 according to data from the Bank of Uganda (BOU).

The shilling gained 1.1% in the first half of the year and a further 4.2% in the second half, reflecting sustained strength throughout the period, BOU said in a statement.