THE closure of foreign exchange shops that operated illegally created an opportunity for banks to boom in business by opening windows for the service and generate income.
In an exclusive interview with the Daily News in Dar es Salaam recently, Mkombozi Bank Plc, Managing Director, Mr Respige Kimati said the government move to uproot unlawful forex shops is commendable and has created stability of the foreign exchange business in the country.
“Before taking this bold decision, speculation and hoarding made by some forex dealers made the business uncompetitive and created some instability,” he said.
He noted further that with the government move, the Tanzanian shilling has improved after having a good system to monitor and control foreign exchange and the Tanzanian shilling trading.
He said if the country does not have control over foreign exchange markets, people may be buying foreign currency without any intention to make foreign transactions to import goods and services.
“If you have no control over the foreign exchange market people may be buying foreign currency but not making foreign transactions, that they are importing goods and services. It may be that they were taking money out of the country which is bad to economy,” he added.
He said in the past when there were many bureau de change shops operating in the country for the banking sector it was not a big business due to unfair competition created by some forex shops that operated unlawfully.
“The rates for buying and selling were completely different from what they were giving to the bank. There may have been speculation and that is why the government intervened,” he noted.
“I think maybe they were getting their dollar to suppliers in a way that wasn’t very fair or maybe they weren’t paying taxes or certain things or there was another way it was helping them earn money at a lower rate and they were able to sell at a lower price and make a profit,” said Kimati.
With this decision, the government is able to monitor and control foreign exchange trading because every dollar transaction must have a backup of what is going to do in the economy activity.
Mr Kimati said to a large extent the bureau de change plays a huge roll of stabilizing currency or setting the value for money according to high demand.
“To a large extent the bureau de change plays a roll stabilizing currency the value of money depending on the demand and supply of such foreign currency,” said Kimati.
He said in the local market there may be demand for dollars but there are no economic activities that are not beneficial to the nation. He added that the dollar trading should support economic activities.