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Forex

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Tanzania Forex

The Tanzanian Shilling (TZS) weakened by more than 50% against the USD over the past five years, from an average annual exchange rate of 1,735 in 2015 to 2,325 in 2020.

Still, Tanzania’s shilling exchange rate remained stable during 2019 and depreciated with 0.7% against the USD.

The low volatility was in part due to interventions by the Bank of Tanzania (BoT) aimed at keeping the interbank foreign exchange market steady.

Tanzania Dollarization

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

Most goods and services are priced exclusively in Tanzanian shilling, with a few exceptions in those businesses where a large share of customers comes from outside the country.

Examples are safari tours, hotels, rentals and accommodations, flight tickets, and goods sold in souvenirs shops, as well as international school fees, and cargo handling fees. In these cases, both the 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 are willing to accept payments in Tanzanian Shilling.

Only 0.1% of the businesses in the Mainland and none in Zanzibar prefers payments exclusively in USD. The general conclusion of the paper is that there is no evidence that Tanzanians have shifted to foreign currencies as a medium of exchange.

Tanzania Forex Trading

With forex trading, you buy or sell the movement in currencies to profit from the appreciation or depreciation of one currency over the other.

Forex trading has seen huge growth across Africa in recent years especially growing rapidly in popularity amongst young people.

Nigeria and South Africa are the biggest forex markets but over the last 2 years, Tanzania and Kenya have experienced huge increases in trading activity.

Sources: Bank of Tanzania (BoT), Bloomberg Markets
Last Update: 31st August 2020