๐ค&๐: ๐ง๐ฎ๐ป๐๐ฎ๐ป๐ถ๐ฎ๐ป ๐๐ต๐ถ๐น๐น๐ถ๐ป๐ด ๐๐๐ฟ๐ฒ๐ป๐ด๐๐ต๐ฒ๐ป๐ ๐๐ผ ๐ฏ๐ฒ๐ฐ๐ผ๐บ๐ฒ ๐๐ผ๐ฟ๐น๐ฑโ๐ ๐๐ผ๐ฝ-๐ฝ๐ฒ๐ฟ๐ณ๐ผ๐ฟ๐บ๐ถ๐ป๐ด ๐ฐ๐๐ฟ๐ฟ๐ฒ๐ป๐ฐ๐
โพRecord high gold prices, tourism, agriculture and transport sectors flood supplies of U.S. dollars to the market
โพIts a buyerโs market as there are now more sellers of the U.S. currency than buyers, with some commercial banks even rationing their dollar purchases
โพ BoT expects the shilling to remain strong, heading to the end of the year
June 11, 2025
Dar es Salaamย
The Tanzanian shilling has rallied to become one of the top performing currencies in the world, due mainly to record high gold prices and a surge in inflows of U.S. dollars from agriculture, tourism, and transport sectors.
The central bank quoted the shilling trading at 2,578/2,604 levels today, up from 2,586/2,612 at the start of March.
The ๐๐ถ๐ฟ๐ฒ๐ฐ๐๐ผ๐ฟ ๐ผ๐ณ ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐ ๐ฎ๐ฟ๐ธ๐ฒ๐๐ ๐ฎ๐ ๐๐ต๐ฒ ๐๐ฎ๐ป๐ธ ๐ผ๐ณ ๐ง๐ฎ๐ป๐๐ฎ๐ป๐ถ๐ฎ (๐๐ผ๐ง), ๐๐บ๐บ๐ฎ๐ป๐๐ฒ๐น ๐๐ธ๐ฎ๐ฟ๐ผ (pictured), said the outlook for the Tanzanian shilling is positive throughout the year, bucking the historical trend of depreciation of the local currency during the first half of a calendar year.
Akaro, who also holds a Chartered Financial Analyst (CFA) designation with over 20 years of experience as a central banker, breaks down the factors behind the strengthening of the shilling against the U.S. dollar in this Q&A interview with our Staff Writer.
๐. ๐๐ก๐ ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ๐๐๐ฆ๐ ๐ฎ๐ง๐๐๐ซ ๐ฉ๐ซ๐๐ฌ๐ฌ๐ฎ๐ซ๐ ๐๐ ๐๐ข๐ง๐ฌ๐ญ ๐ญ๐ก๐ ๐.๐. ๐๐จ๐ฅ๐ฅ๐๐ซ ๐ข๐ง ๐ญ๐ก๐ ๐๐ข๐ซ๐ฌ๐ญ ๐ช๐ฎ๐๐ซ๐ญ๐๐ซ ๐จ๐ ๐ญ๐ก๐ข๐ฌ ๐ฒ๐๐๐ซ, ๐๐ฎ๐ญ ๐ก๐๐ฌ ๐ซ๐๐ฅ๐ฅ๐ข๐๐ ๐จ๐ฏ๐๐ซ ๐ญ๐ก๐ ๐ฉ๐๐ฌ๐ญ ๐ญ๐ก๐ซ๐๐ ๐ฆ๐จ๐ง๐ญ๐ก๐ฌ ๐ญ๐จ ๐๐๐๐จ๐ฆ๐ ๐จ๐ง๐ ๐จ๐ ๐ญ๐ก๐ ๐ฐ๐จ๐ซ๐ฅ๐โ๐ฌ ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐ข๐ง๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐๐ข๐๐ฌ. ๐๐ก๐๐ญโ๐ฌ ๐ญ๐ก๐ ๐ฌ๐๐๐ซ๐๐ญ ๐๐๐ก๐ข๐ง๐ ๐ญ๐ก๐ ๐๐ก๐๐ง๐ ๐ข๐ง๐ ๐๐จ๐ซ๐ญ๐ฎ๐ง๐๐ฌ?
A. The Tanzanian shilling has appreciated as a result of increased inflows of U.S. dollars from the agriculture, gold exports, tourism, and transport sectors, as well as the implementation of foreign exchange regulations published in March 2025.
๐. ๐๐ก๐๐ญ ๐๐๐ง ๐ฒ๐จ๐ฎ ๐ญ๐๐ฅ๐ฅ ๐ฎ๐ฌ ๐ฆ๐จ๐ซ๐ ๐๐๐จ๐ฎ๐ญ ๐๐๐ ๐ข๐ง๐๐ฅ๐จ๐ฐ๐ฌ ๐๐ซ๐จ๐ฆ ๐ ๐จ๐ฅ๐?
A. As you are aware, Tanzania is a major gold producer, with an annual output of more than 1.9 million ounces of gold. Gold prices on the world market have increased by around $1,000 per ounce over the past year, from $2,310 per ounce to $3,326 per ounce as of yesterday.ย
Without factoring in gold production, the price increase alone over the past year has been significant, with inflows from gold rising by 43.94% or equivalent to around $2 billion going forward.
The new gold output from June 1 is being sold at record-high prices, while there hasnโt been any significant increase in the cost of mining.
๐. ๐๐จ๐ฐ ๐ข๐ฌ ๐ญ๐ก๐ ๐ญ๐จ๐ฎ๐ซ๐ข๐ฌ๐ฆ ๐ฌ๐๐๐ญ๐จ๐ซ ๐๐จ๐ง๐ญ๐ซ๐ข๐๐ฎ๐ญ๐ข๐ง๐ ๐ญ๐จ ๐ญ๐ก๐ ๐ฌ๐ญ๐ซ๐๐ง๐ ๐ญ๐ก๐๐ง๐ข๐ง๐ ๐จ๐ ๐ญ๐ก๐ ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ?
A. Tanzania received 2.6 million international tourist arrivals last year, fetching the country about $3.9 billion. To illustrate the significance of the $3.9 billion inflows from tourism, during the Covid-19 pandemic in 2020, this sector attracted fewer than 250,000 visitors and generated just $715 million. It did manage to generate $1 billion.
A year ago (2022), tourism earned the country nearly $2.5 billion, so you can see the surge in tourism revenue in 2024.
๐. ๐๐จ๐ฐ ๐ก๐๐ฌ ๐ญ๐ก๐ ๐๐๐ซ๐ฆ๐ข๐ง๐ ๐ฌ๐๐๐ญ๐จ๐ซ ๐ก๐๐ฅ๐ฉ๐๐ ๐ญ๐จ ๐ฉ๐ซ๐จ๐ฉ ๐ฎ๐ฉ ๐ญ๐ก๐ ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ?
A. In agriculture, if you follow the TMX (Tanzania Mercantile Exchange) auctions, they are currently auctioning thousands of tonnes of sesame seeds every day, with a kilogramme of the commodity fetching the equivalent of TZS 2,300 to above TZS 3,000. This increases the supply of U.S. dollars to the Tanzanian economy.
We also expect around $400 million in inflows from tobacco exports alone this season. This is also expected to increase the amount of FX liquidity in the market.
๐. ๐๐ก๐ข๐๐ก ๐จ๐ญ๐ก๐๐ซ ๐ฌ๐๐๐ญ๐จ๐ซ๐ฌ ๐๐ซ๐ ๐๐ฅ๐ฌ๐จ ๐๐จ๐ง๐ญ๐ซ๐ข๐๐ฎ๐ญ๐ข๐ง๐ ๐ญ๐จ ๐.๐. ๐๐จ๐ฅ๐ฅ๐๐ซ ๐ข๐ง๐๐ฅ๐จ๐ฐ๐ฌ ๐ข๐ง ๐๐๐ง๐ณ๐๐ง๐ข๐?
A. Transportation is another key source of foreign exchange for the country. You can see on the Dar es Salaam-Dodoma highway that there are many trucks from Tanzania carrying transit goods to and from neighbouring countries, and these customers pay in U.S. dollars.
๐. ๐๐ก๐ ๐ ๐จ๐ฏ๐๐ซ๐ง๐ฆ๐๐ง๐ญ ๐ก๐๐ฌ ๐ซ๐๐๐๐ง๐ญ๐ฅ๐ฒ ๐ญ๐ข๐ ๐ก๐ญ๐๐ง๐๐ ๐๐จ๐ซ๐๐ข๐ ๐ง ๐๐ฑ๐๐ก๐๐ง๐ ๐ ๐ซ๐๐ ๐ฎ๐ฅ๐๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐๐จ๐ฎ๐ง๐ญ๐ซ๐ฒ. ๐๐ก๐๐ญ ๐ข๐ฆ๐ฉ๐๐๐ญ ๐ก๐๐ฌ ๐ญ๐ก๐ข๐ฌ ๐ก๐๐ ๐จ๐ง ๐ญ๐ก๐ ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ?
A. Following amendments made to the Bank of Tanzania Act last year to Section 26-2 and the subsequent issuance of Regulations on the Use of Foreign Currencies 2025 by the Finance Minister, it is an offence, amongst residents to quote prices for and make payments of goods and services in foreign currency instead of Tanzanian shillings.ย
As a result of compliance with these new regulations, many people are offloading their FX (foreign exchange) into the market. This increased supply of dollars has therefore lowered the price of the U.S. currency. After the new regulations came into force at the end of March, the liquidity in terms of buying and selling dollars in the retail FX market rose from roughly a daily turnover of $40 million to up to $70 million. During the same period last year, the daily market turnover was $30 million. So, the retail FX market turnover has more than doubled. On the other hand, the daily turnover of the IFEM (Interbank Foreign Exchange) market is currently at around just $10 million.
๐. ๐๐ก๐๐ญ ๐จ๐ญ๐ก๐๐ซ ๐๐๐๐ญ๐จ๐ซ๐ฌ ๐๐ซ๐ ๐๐๐ก๐ข๐ง๐ ๐ญ๐ก๐ข๐ฌ ๐ข๐ฆ๐ฉ๐ซ๐๐ฌ๐ฌ๐ข๐ฏ๐ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐จ๐ ๐ญ๐ก๐ ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ?
A. Tanzaniaโs strong macroeconomic fundamentals have also contributed to the strengthening of the shilling. The key macroeconomic fundamentals include GDP growth, inflation, current account deficit, and the foreign exchange reserves position. Our GDP growth stood at 5.5% last year, and we expect it to expand by 6% this year, which is a very strong growth rate for the countryโs economy. Tanzaniaโs inflation rate has remained stable at 3% for a considerable period, offering attractive real returns on Tanzanian assets. The current account deficit has narrowed significantly from 7.5% to 2.6% as recently as March. Our forex reserves have remained sustainable at almost $5.5 billion as we (BoT) bought $500 million worth of gold since October last year, when we started the gold reserve programme. This offers a solid cushion to support FX liquidity in the market whenever the Bank needs to step in.
Tanzaniaโs imports and exports position is also favorable, with total imports standing at $14.9 billion, compared to around $14.5 billion from total exports based on recent data.
๐. ๐๐ก๐๐ญ ๐ข๐ฌ ๐ญ๐ก๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง ๐ข๐ง ๐ญ๐๐ซ๐ฆ๐ฌ ๐จ๐ ๐๐๐ฆ๐๐ง๐ ๐๐จ๐ซ ๐๐จ๐ฅ๐ฅ๐๐ซ๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐๐จ๐ฎ๐ง๐ญ๐ซ๐ฒ?
A. Demand for dollars has fallen because of the completion of the construction of some of the flagship infrastructure projects, including the Julius Nyerere hydropower dam. Oil prices at the world market have also declined from an average of $100 per barrel to around $65 per barrel. All these factors have contributed to the appreciation of the shillingโs exchange rate.ย
Some commercial banks are currently rationing their purchases of U.S. dollars, as demand for foreign exchange remains lower than supply. This situation is forcing them to request that the central bank buy dollars due to an excess of foreign currency.
๐. ๐๐จ๐ข๐ง๐ ๐๐จ๐ซ๐ฐ๐๐ซ๐, ๐ฐ๐ก๐๐ญ ๐ข๐ฌ ๐ญ๐ก๐ ๐จ๐ฎ๐ญ๐ฅ๐จ๐จ๐ค ๐๐จ๐ซ ๐ญ๐ก๐ ๐๐๐ง๐ณ๐๐ง๐ข๐๐ง ๐ฌ๐ก๐ข๐ฅ๐ฅ๐ข๐ง๐ ?
A. Due to the onset of the agricultural and tourism seasons as well as compliance with the FX regulations, we expect the shilling to continue appreciating against the U.S. dollar. Over the past 20 years that I have been at the central bank, I have never seen such a significant influx of foreign exchange liquidity during the first half of the year. This implies our economy is evolving with solid macroeconomic fundamentals providing a significant boost to the currency.
The shilling will therefore continue to strengthen up to December, at which point it will be in a very good position.
โย
