The Bank of Uganda (BoU) has introduced a new financial market benchmark designed to improve transparency around foreign currency funding costs and strengthen the efficiency of Uganda’s foreign exchange market.
The central bank has, for the first time, published the Uganda Foreign Exchange (FX) Swap Curve, a benchmark that shows the cost of exchanging Ugandan shillings for US dollars across different periods, from overnight transactions to one-year maturities.
The move marks a significant development in Uganda’s financial market infrastructure, giving commercial banks, businesses, investors, policymakers and other market participants a common reference point for understanding the cost of foreign currency funding.
New benchmark for foreign currency costs
The Uganda FX Swap Curve is presented as a chart showing FX swap points for the Ugandan shilling against the US dollar across different maturities.
According to the Bank of Uganda, the benchmark is intended to improve pricing transparency, support transaction pricing and valuation, strengthen price discovery and provide market participants with greater insight into foreign currency funding conditions.
The curve covers eight key maturities: overnight, one week, two weeks, one month, three months, six months, nine months and one year. It will be updated and published daily as part of the Bank of Uganda’s Daily Money Market Report.
The daily publication means that market participants will have access to a regularly updated reference for assessing movements in the cost of foreign currency funding rather than relying solely on individual market quotations.
What an FX swap means
An FX swap is a financial arrangement in which two parties exchange one currency for another at an agreed exchange rate while simultaneously agreeing to reverse the transaction at a specified future date.
The cost of such a transaction is influenced by prevailing market conditions, including differences in interest rates between currencies and movements in exchange rates.
The new Uganda FX Swap Curve therefore seeks to illustrate the implied cost of obtaining foreign currency funding over different periods, ranging from overnight funding to one year.
For banks and other institutions that regularly deal in foreign currencies, this information can provide an important reference when pricing transactions, managing exposures and assessing the cost of funding.
Implications for banks and businesses
The new benchmark could become particularly important for commercial banks and businesses with significant foreign currency transactions.
Banks can use the curve as a reference when pricing FX swap transactions and valuing financial positions. It can also support risk management by giving institutions a market-based indication of foreign currency funding conditions across different time horizons.
For businesses, particularly those involved in international trade, the availability of a transparent market reference can provide additional information when evaluating foreign exchange-related costs and risks.
The Bank of Uganda says the curve will provide banks, businesses, investors and policymakers with a reliable market reference for assessing foreign currency funding costs. It is also expected to support transaction pricing, valuation, risk management and analysis of market conditions.
Daily quotations from commercial banks
The benchmark has been developed by the Bank of Uganda in collaboration with commercial banks and the London Stock Exchange Group (LSEG).
Before its introduction, a pilot exercise was conducted to establish whether participating banks could consistently provide reliable market quotations across the various maturities covered by the curve.
The pilot covered overnight, one-week, two-week, one-month, three-month, six-month, nine-month and one-year maturities.
Under the new arrangement, commercial banks will submit timely and accurate quotations on each business day. The information will then support the calculation and publication of the curve.
The benchmark will be published daily through the Daily Money Market Report, making it accessible to market participants following developments in Uganda’s money and foreign exchange markets.
First curve published in August
The Bank of Uganda’s initial publication provides the Uganda FX Swap Curve as at 6 August 2026, 5:00 p.m.
The central bank, however, cautions market participants against treating the published curve as a guaranteed price at which every FX swap transaction will be executed.
The curve is a reference benchmark derived from quotations submitted by commercial banks, meaning that actual transaction prices can differ depending on prevailing market conditions, liquidity and other commercial considerations.
That distinction is important because foreign exchange markets can change rapidly, while individual transactions can be affected by the amount being traded, the availability of liquidity and the specific terms negotiated between counterparties.
Strengthening price discovery
One of the major objectives behind the initiative is to improve price discovery in Uganda’s foreign exchange market.
Price discovery refers to the process through which buyers and sellers establish market prices based on available information and trading conditions.
By publishing a daily benchmark derived from quotations provided by commercial banks, the Bank of Uganda is seeking to make information about foreign currency funding costs more readily available across the market.
This could help reduce information gaps between market participants and provide a clearer reference when financial institutions and businesses assess the cost of foreign currency transactions.
The central bank says greater transparency should contribute to more efficient markets while enabling participants to make better-informed financial decisions.
Broader financial market development
The launch also fits into the broader effort to strengthen Uganda’s financial market infrastructure.
The availability of benchmarks is important in modern financial markets because they provide common reference points that different institutions can use when pricing, valuing and managing financial instruments.
For Uganda, the FX Swap Curve introduces a structured reference specifically for the cost of foreign currency funding across a range of maturities.
This is particularly relevant in an economy where businesses and financial institutions interact with international markets and where movements in the exchange rate can affect the cost of imports, foreign currency obligations, investments and other cross-border transactions.
By extending market information beyond the spot exchange rate to include implied funding costs across different periods, the new curve gives participants an additional tool for understanding foreign exchange market conditions.
A tool for policymakers and investors
The benchmark is not limited to commercial banks.
The Bank of Uganda identifies investors and policymakers among the groups expected to use the curve. For policymakers, movements in the curve could provide additional information about conditions in the foreign currency market and the cost of accessing dollar liquidity.
Investors and financial market participants can similarly use the benchmark as an additional market reference when analysing foreign currency exposures and financial positions.
The curve could therefore become part of the wider set of indicators used to monitor Uganda’s financial markets.
BoU sees milestone in financial infrastructure
The Bank of Uganda describes the launch as an important milestone in the development of Uganda’s financial market infrastructure.
The central bank expects the benchmark to improve pricing transparency, provide a credible reference for foreign currency funding, strengthen price discovery and support more efficient markets.
It also expects the initiative to contribute to better-informed decision-making among financial market participants and enhance the resilience and continued development of Uganda’s financial system.
The daily nature of the publication will be central to achieving those objectives. As commercial banks provide quotations each business day and the curve accumulates a history of market conditions, participants should be able to use it not only as a snapshot of current funding costs but also as a reference for observing changes over time.
For Uganda’s financial sector, the introduction of the FX Swap Curve consequently represents more than the publication of a new chart.
It establishes a new market reference intended to bring greater visibility to the cost of foreign currency funding and provide banks, companies, investors and policymakers with a common basis for assessing conditions in the FX market.
With the Bank of Uganda now publishing the benchmark daily through its Daily Money Market Report, the curve is set to become an additional source of market information as Uganda continues to develop deeper, more transparent and resilient financial markets.
