Tanzania’s forex reserves hit $5.28 billion at the end of June

Tanzania’s foreign exchange reserves increased to $5.28 billion at the end of June 2023, compared with $5.11 billion recorded during the similar period in 2022 according to the Central Bank.

According to the Bank of Tanzania (BoT) Economic Bulletin for the quarter ending June 2023 release this week, the reserves remained adequate, covering 4.8 months of projected imports of goods and services, in line with the country and EAC benchmarks of 4 and 4.5 months, respectively.

To lessen the demand pressure on foreign exchange stemming from the global economic shocks, the Central Bank sold $120 million in the market.

According to the report, the shilling remained fairly stable against the US dollar, trading at an average of 2,328.78/- per US dollar, compared with 2,321.31/- per US dollar in the preceding quarter.

‘On annual basis, the shilling depreciated by 0.7 percent from average of 2,311.81/- per US dollar registered in the quarter ending June 2022.

Meanwhile, the external sector is expected to improve further in the coming quarters owing to the declining pressure from global commodity prices, the easing of global financial conditions as many central banks have lessened aggressiveness in tightening monetary policy, and the revamping of tourism activities as the spillover effects of the COVID-19 pandemic continue to fade,” the Central Bank said.

The report says factors are complemented by various measures adopted to address the shortage of foreign exchange and high depreciation of the exchange rate, as well as seasonal increase in foreign exchange inflows from traditional export crops and tourism earnings.

The report says that external sector of the economy continued to experience shortage of foreign exchange and fast depreciation of the exchange rate due to the global challenges associated with the war in Ukraine, residual effects of the COVID-19 pandemic and climate-related impact.

“However, it has showed signs resilience and improvement over time owing to various measures adopted,” the report adds.

Tanzania’s current account deficit also narrowed to $833.2 million during the quarter ending June 2023 compared with a deficit of $1.29 billion recorded during the similar quarter in 2022, largely owing to the global commodity price moderation.