BoT sells 5.1 tonnes of gold

DAR ES SALAAM: THE Bank of Tanzania sold 5.1 metric tonnes of gold from its reserves last week as prices rose, part of a strategy that allows the bank to trade bullion while building its holdings to strengthen international reserves and support the shilling.

The BoT Governor, Emmanuel Tutuba told reporters in Dar es Salaam yesterday that the bank held 35.4 tonnes of gold before the sale last week.

“We continue to buy and sell depending on when the price is favourable,” Tutuba said, noting that the central bank’s strategy was to continue buying and selling gold when prices were favourable.

“If the price is favourable, we sell on any given day. If the price falls, we do not sell.”

He said the central bank is managing gold as an active reserve asset rather than simply accumulating bullion with a strategy to buy for accumulation and sell when the bank sees an opportunity to realise value.

“We understand those calculations very well. Our people in the relevant departments are closely monitoring them,” Tutuba said.

The Bank of Tanzania began buying gold for its reserves around 2023 as Tanzania sought to strengthen its foreign-exchange buffers and reduce pressure on the shilling.

In September 2024, the mining regulator ordered gold miners and traders exporting the metal to allocate at least 20 per cent of their output for sale to the central bank.

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The strategy gives the central bank flexibility to convert part of its bullion holdings into foreign exchange when market conditions are attractive while continuing to accumulate gold when prices are less favourable.

The policy has helped the BoT build gold into a larger component of its reserve-management strategy at a time when bullion prices have remained elevated.

Gold has become increasingly important to Tanzania’s external position as bullion prices remain elevated.

The Bank of Tanzania said in its latest monetary policy statement that high gold prices were supporting foreign-exchange earnings and reserve accumulation.

The country’s foreign-exchange reserves stood at more than $6 billion in September, covering about 4.3 months of imports, above the national minimum of four months.

The approach gives the central bank two potential benefits: accumulating gold as a reserve asset while retaining the ability to generate foreign exchange from sales when market prices are favourable.

For Tanzania, the significance of the gold strategy extends beyond the value of the bullion itself.

Gold provides the central bank with another reserve asset that can generate foreign exchange when sold, while domestic purchases retain part of the country’s mineral wealth within the official reserve system.