Forex

The Bank of Tanzania (BOT) indicates that the Tanzanian Shilling remained relatively stable in 2015/16 after experiencing high volatility in 2014/15.

This is a result of prudent fiscal policy, and sustained tight monetary policy measures implemented by the BOT to contain inflation expectations and excessive volatility of the Shilling exchange rate against the US Dollar.

According to the latest data by the National Bureau of Statistics (NBS), the purchasing power of 100 Tanzanian Shillings reached TZS95 and 98 cents in November 2016 compared to TZS95 and 86 cents in October 2016.

The purchasing power of the consumer’s Tanzanian Shilling measures the change in the value of consumer goods and services that a Tanzanian Shilling could buy at different periods.

Tanzania Dollarization

The Tanzanian Shilling is used as the principal unit of account and medium of exchange in most of domestic transactions in the country.

Most goods and services in the country are priced exclusively in Tanzanian shilling, with a few exceptions in those businesses where a large share of customer base comes from outside the country, such as tourist hotels, souvenirs shops, Airlines, tour operators, rental apartments in some parts of urban centers, international schools etc. In these cases, both Tanzanian shilling and the US Dollar are often used.

According to a working paper by the BOT, about 3.2% of the businesses in Mainland Tanzania and 4.5% in Zanzibar quote prices in USD, but most of these businesses were willing to accept payments in Tanzanian Shilling.

Only 0.1% of the businesses in the Mainland and none in Zanzibar indicated that they would prefer payments exclusively in USD.

“Our general conclusion is that there is no evidence that Tanzanians have shifted to foreign currencies as a medium of exchange,” the paper concludes.