The recent trends in Uganda’s exchange rate have left both economists and the public concerned. Yet Dr. Atingi Ego, the Governor of the Bank of Uganda, whose communications carry official weight, emphasized that the Bank’s intervention is intended to smooth out excess volatility. He added that if the shilling has been depreciating, it hasn’t been erratic enough to warrant intervention yet. Of course, in a system where Uganda seeks to maintain fixed exchange rates between the UGX and the currencies of most other countries, especially the USD, without using foreign exchange controls or their equivalent, you would agree with the Governor that there is little allowable margin of freedom with respect to internal monetary policy. I don’t think that is enough for the Bank of Uganda to wash its hands of the sin of the recent exchange rate struggles. With respect to internal policies, the stock of money, broadly defined, is a critical tool for maintaining external equilibrium. Domestic monetary conditions are, on several occasions, the result of internal policies and events affecting the demand for and supply of exchange rates, and therefore the behavior of the stock of money required to maintain external equilibrium. This now warrants a review of recent trends in broad money growth in Uganda, which the Bank of Uganda has exclusive authority over. I have consistently warned (month on month) about the consequences of excess money supply since November 2025. Money supply has grown at an annual rate just above 18% through July 2026. This rate of growth is well above Uganda's productive capacity. This growth in money has produced a buoyant capital market and increased exchange balances for both businesses and households. This has increased net wealth, which has shown up in higher imports, given that Uganda is not highly industrialized. It is the faster money growth, not imports, that is causing the recent exchange rate depreciation. Now that the shilling has reached 4000 or higher, as I accurately predicted in 2024, many reasons are being cited to explain the recent trends in the exchange rate, including the sovereignty bill, rising fuel prices, and so on, all of which may be consequences or symptoms of the main problem. If you forget everything written above, remember these two: First, there is no other way to sustainably maintain a stable exchange rate in a floating exchange rate system than by properly managing the money supply, and second, exchange rate instability is simply a symptom of underlying economic conditions, and we may deny that, but not for too long.