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Drops in Ugandan Shilling Cause Panic

The past few months have seen a dramatic decline in the value of the Ugandan shilling. This fall has caused a spike in rents and a drop in salaries across the nation, with many wondering where will it end.

This past month, the Ugandan shilling dropped to historic lows. Vendors who pay their rent in U.S. dollars have seen a sharp spike in costs, while some health clinics have started setting their prices in dollars.

There are a number of factors that have caused the shilling to fall, including a stronger U.S. economy and a drop in exports to war-ravaged South Sudan.

Bank of Uganda research director James Opolot says falling commodity prices have also hurt because most of the country's exports are commodities.

Although the shilling remains low, it has stabilized somewhat due to intervention from the Bank of Uganda. Many officials blame the sharp drop on sensationalistic stories in the media that said the bank would no longer intervene in the market.

Bank of Uganda communications director Christine Alupo says that is not true, but adds the bank does not and cannot intervene all the time.

"And that has been our standard message throughout. Our message has always been that our interventions are when there is excessive volatility and we are trying to restore stability to the market and we have judged that some of the movement is by factors that are not necessarily fundamentals," said Alupo.

But the weak shilling has made life difficult for foreign workers.

Jenny Smith says with a family to feed it has been frustrating.

“Well, my salary is effectively $100 less a month then it was, so there is that. And all the prices have also increased recently, the price of shopping in supermarkets," she said. "It is not a huge amount, but it has gone up. So having a combination of less money and then higher expenses ... You can not make ends meet as well as they were before. And it feels like it is only going to get worse the closer we get to the election."

Although many are blaming the upcoming elections for the drop, banking officials say if people stay calm and continue to invest normally, the situation should stabilize.

But those who are struggling to stay afloat in the current condition say their time is running out.