BoT injects 100 million US dollars to prop up shilling

ZANZIBAR.LAST week the Bank of Tanzania (BoT) sold 100 million US dollars and plans to release more to local commercial banks in the country in efforts to stabilise the shilling against the US currency.

“We are taking different workable measures to ensure our shilling against the foreign money is stable. Last week we sold 100 million US dollars to commercial banks and we will do it again…,” the BoT Governor, Mr Emannuel Tutuba, told reporters in Zanzibar during a meeting with tourist hotels’ proprietors in the Isles.

He said despite economic shocks globally caused by the shortage of US dollars and other challenges, Tanzania was better off in comparison to other countries.

“It is true that our currency against the US dollar has dropped, but these interventions include encouraging opening up of more bureaux de change and allowing hotels to do the Forex business, will help get foreign money and also keep our economy growing,” Tutuba said.

The governor explained that after reforms and reviews of the forex law, BoT welcomes investors in the business and that there would be no red-tapes. The BoT would now issue licenses within five working days, he said.

“The requirement for local (Tanzanians) investors is only 500m/- minimum capital for grade A, while Grade B the minimum capital is 200m/- and Grade C (which include hotels of three-stars and above), no minimum capital requirement.

Just open the businesses after fulfilling other registration conditions.” The Central Bank Governor warned local traders and other people hoarding US dollars and other foreign money that they could suffer loss as BoT continues to take serious steps to get it into the economy.

In a statement issued later, the bank said it continues to actively participate in the market by selling US dollars to commercial banks as part of its efforts to mitigate foreign currency shortages in the country.

The initiative aims to ensure adequate foreign currency liquidity in the market and in addition in intends to ensure customer demands for foreign currency are met through licensed financial institutions at the prevailing market price.

“It is imperative for all stakeholders to understand that the Bank of Tanzania’s intervention in the forex market is guided by its Foreign Exchange Intervention Policy aimed at promoting market stability and meeting the legitimate forex needs in the country,” the statement reads in part.

Meanwhile, the BoT Governor said that the current account deficit gap which was 5.3bn/- in 2022 has dropped to 2.7bn/- by December last year.

He said the introduction of Export Credit Guarantee Scheme (ECGS) and the Import Substitution Initiatives (ISI), aims to keep the economy growth stable.

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