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KAMPALA, Uganda—The consequences of a soaring U.S. dollar are trickling down to empty shelves at Quality Supermarkets in Kampala, where clerks turn away shoppers seeking clothes and backpacks the store can’t afford to import.
As Uganda’s shilling has hit a record low against the dollar, Quality Supermarkets and its competitors have struggled to find enough U.S. dollars to buy the packaged foods and manufactured goods they import from abroad.
Central bankers’ efforts to boost growth in Europe and Asia are driving up the dollar’s value against currencies ranging from the euro to the Indonesian rupiah, as higher interest rates in the U.S.—and expected increases as the Federal Reserve prepares to raise rates—attract investors seeking potentially bigger returns. African currencies are caught in the riptide, hurting companies that rely on dollars to buy foreign goods.
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That is threatening to exacerbate trade deficits that were already climbing, as consumer demand outpaces manufacturing. Hundreds of millions of people in what the African Development Bank describes as a nascent consumer class have helped diversify Africa’s economy away from mining and oil drilling. But consumers’ hunger for foreign electronics, clothes and food is also underpinning demand for dollars to buy these goods, pushing up trade deficits. As African currencies slump, those deficits could continue to widen.
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