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The Bank of Tanzania (BoT) has stepped in to stabilize the value of the Tanzanian Shilling by participating in the Interbank Foreign Exchange Market (IFEM).
This intervention aligns with the bank’s 2023 Foreign Exchange Intervention Policy and aims to maintain stability in the country’s currency while supporting broader economic goals.
Recent fluctuations in the foreign exchange market have put pressure on the Shilling, prompting the central bank to take action. By injecting US dollars into the system, BoT seeks to ease demand for foreign currency and prevent sharp depreciation of the local currency. This is a common strategy used by central banks to manage inflation, stabilize prices, and protect national reserves.
According to official reports, BoT sold $25 million in an auction at a weighted average exchange rate of Sh2,663.16 per US dollar. Market participation was high, with total bids reaching $75.2 million, indicating strong demand for foreign exchange. The highest bid rate accepted in the auction was Sh2,670.00 per US dollar, while the lowest accepted bid stood at Sh2,658.20 per US dollar.
The BoT’s intervention highlights the challenges posed by global economic fluctuations, which have affected many emerging economies. A stable exchange rate is critical for businesses, investors, and consumers, as it ensures predictable costs for imports, exports, and daily transactions.
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Financial experts believe that the central bank’s move will help prevent excessive volatility, allowing businesses and individuals to plan better. “When the Shilling remains stable, it benefits both businesses and ordinary citizens by keeping the cost of imported goods manageable,” explained a local economic analyst.
However, some economists caution that while short-term interventions can help stabilize currency markets, long-term solutions require strengthening the country’s economic fundamentals. This includes boosting local production, increasing exports, and attracting foreign investments.
The Bank of Tanzania has reiterated its commitment to ensuring financial stability and supporting sustainable economic growth. Market watchers will be keen to see how these measures impact the Shilling in the coming weeks and whether additional interventions may be required to maintain stability in the face of global economic uncertainties.
