Tanzanian Shilling Surges: A Remarkable Economic Turnaround in 2024
Dar es Salaam – The Tanzanian shilling has emerged as one of the world’s top-performing currencies, driven by record-high gold prices and substantial dollar inflows from key economic sectors.
The central bank reports the shilling trading at 2,578/2,604 levels, a significant improvement from 2,586/2,612 at the start of March. Financial experts project a positive outlook for the currency throughout the year, challenging historical depreciation trends.
Key Factors Driving Currency Strength:
1. Gold Exports
Tanzania’s gold production, exceeding 1.9 million ounces annually, has benefited from a dramatic price surge. Gold prices have jumped from $2,310 to $3,326 per ounce, generating approximately $2 billion in additional revenue.
2. Tourism Sector
The tourism industry has experienced remarkable growth, attracting 2.6 million international visitors in 2023 and generating $3.9 billion – a stark contrast to the pandemic-era figures of just $715 million in 2020.
3. Agricultural Exports
Agricultural commodities like sesame seeds and tobacco are significantly contributing to foreign exchange inflows. Sesame seed auctions and an expected $400 million from tobacco exports are bolstering dollar availability.
4. Regulatory Measures
New foreign exchange regulations have encouraged increased dollar circulation, with daily retail forex market turnover doubling from $30 million to $70 million.
Economic Fundamentals Reinforcing Currency Strength:
– GDP growth projected at 6%
– Stable inflation rate around 3%
– Narrowed current account deficit
– Forex reserves maintained at $5.5 billion
Experts predict continued shilling appreciation through December, highlighting Tanzania’s evolving economic landscape and robust macroeconomic fundamentals.
