Tanzanian shilling remained stable against major currencies in April, 2023

The Tanzanian shilling stayed stable against currencies of major trading partners in April 2023, consistent with low inflation rate and adequate reserves,  trading at an average rate of 2,324.07/- per US  dollar, compared with 2,322.16/- per US dollar recorded in the preceding month according to the Bank of Tanzania (BoT) Economic Review for May, 2023.

“On annual basis, the shilling depreciated by 0.5 percent from 2,310.14/- per US dollar in April 2022,” the report shows.

The interbank foreign exchange market (IFEM) continued to facilitate exchange of foreign currency   liquidity in the banking system in April, 2023 posting a total market turnover of $63.3 million in April 2023, compared with USD 91.5 million traded in the preceding month.

In a bid to contain the growing pressure on foreign exchange caused by high global commodity prices, the Central Bank remained on the selling side of the market, selling a total of $34 million during the month.

The Central Bank earlier this month issued new directives to regulate forex exchange, a move expected to foster macroeconomic stability and safeguard the stability of the financial system in the country

The bank banned trading of foreign exchange with international foreign currency brokers who are not licensed in Tanzania with effect from this month as part of the Central Bank’s review of the foreign exchange market operations in consideration of the current market development.

 “The Bank is reminding all the dealers of foreign exchange to observe the requirements under the foreign exchange regime in the country at all-time,” the Bank of Tanzania Governor Emmanuel Tutuba said in a statement.

The Central Bank also directed that all Foreign exchange transactions exceeding $1 million per transaction in the retail market shall at all times be traded within the interbank foreign exchange market prevailing quoted prices.

“All transactions of a single customer in a day shall be summed up for the purpose of determining this amount,” Tutuba said.

The bank said foreign exchange dealers are at all ties required to strictly observe the procedures for Know Your Customer (KYC) in their undertakings.

The statement also noted that the limit for the foreign exchange Net Open Position (NOP) shall be 10% of Core Capital and has to be observed at all times adding that all letters of Credit (LCs) for transit cargoes shall be funded by foreign exchange mobilized from respective destination countries.

“It is reiterated that compliance with the requirements stated hereinabove is mandatory and shall be subject to examination and monitoring by the Bank of Tanzania and infringement attract penal sanctions as provided for in the Foreign Exchange Act, 1992,” the BoT Governor Emmanuel Tutuba said.