Tanzania FX rules bolster shilling

DAR ES SALAAM: TANZANIA’S shilling has continued to stabilise against the US dollar, supported by disciplined monetary policy, easing global pressures, and the government’s recent regulations reinforcing the use of local currency, according to Bank of Tanzania (BoT) Governor Emmanuel Tutuba.

Speaking in Dar es Salaam recently, Mr Tutuba said the currency’s performance varied depending on the period analysed, but overall trends point to improving stability rather than a speculative rally.

“The shilling continues to strengthen, although the outcome depends on the timeframe analysed,” Mr Tutuba said.

“Between December 2024 and December 2025, the currency recorded a marginal appreciation of about 0.8 per cent. However, comparing October 2024 with October 2025, the shilling strengthened by 8.9 per cent.”

The shilling is currently trading around 2,460–2,470 per US dollar, according to central bank data. While the currency has not ranked among the world’s top 10 performers by percentage gains in 2025, Mr Tutuba said this reflects a phase of consolidation rather than weakness, contrasting with sharp rebound rallies seen in some regional peers.

The Monetary Policy Committee (MPC), which met recently, said the shilling remained stable during the quarter, recording a modest appreciation of about 0.8 per cent against the dollar.

The currency’s recent stability follows a volatile period earlier in 2025. In the first quarter, the shilling depreciated by about 8.9 per cent, briefly touching around 2,645 per dollar, prompting it to be labelled among the world’s weakest performers at the time.

That weakness proved short-lived.

In the second quarter, the currency recovered sharply to about 2,631 per dollar by June, driven by export receipts and improved foreign exchange liquidity.

By the second half of 2025, the shilling entered an appreciation phase, supported by strong inflows from gold exports and tourism.

ALSO READ: Shilling stabilisation plan

Between October 2024 and October 2025, the currency strengthened by about 9.5 per cent year-on-year, placing it among Africa’s more resilient currencies.

The currency’s recent stability has also been reinforced by the government’s long-anticipated regulations on foreign currency usage, GN 198 of 2025, which came into effect on March 28, 2025.

The regulations, stemming from amendments to the Bank of Tanzania Act under the Finance Act of 2024, require all domestic transactions to be conducted in Tanzanian shillings (TZS).

Key provisions included pricing and payment for goods and services must be in local currency, publishing prices, invoicing, or demanding payment in foreign currency is prohibited; and existing foreign currency contracts must be amended within 12 months or face nullification unless an extension is granted.

Exemptions apply for government payments to regional or diplomatic organisations, foreign currency loans by local banks, and purchases at duty-free shops.

According to analysts, the move to reinforce TZS usage could reduce demand for foreign currency in local transactions, supporting the shilling’s stability and limiting volatility in the domestic market.

Analysts expect the shilling to average around 2,550 per dollar in 2026, underpinned by high gold prices, continued tourism inflows, major infrastructure projects, including the standard gauge railway (SGR) and East African Crude Oil Pipeline (EACOP) and the strengthened policy framework restricting foreign currency usage.

Although it has not featured among the global top performers by percentage gains this year, the shilling is increasingly cited by regional analysts as an example of how tight monetary policy, foreign exchange discipline and legal reinforcement of the local currency can shield households from high inflation seen in other emerging markets.