Tanzanian Shilling Depreciation Against US Dollar: Causes and Implications
The Tanzanian shilling, which had appreciated against the US dollar in late 2024, has encountered renewed depreciation as of early 2025. Contributing factors include rising demand for imported goods, economic pressures from seasonal events, and reduced foreign currency supply due to lower exports. Experts predict that fluctuations may be temporary but caution that prolonged depreciation could lead to economic repercussions.
The Tanzanian shilling, which experienced gains against the US dollar throughout December 2024, has recently entered a phase of depreciation. As reported by the Bank of Tanzania (BoT), the shilling traded at Sh2,721.68 on October 4, 2024 but had improved to Sh2,513.1169 by December 10, 2024. By the end of the year, the local currency stabilized at a mean rate of Sh2,394.7558 against the dollar, only to decline again, closing January 2025 at approximately Sh2,486.6387 per dollar and further worsening to Sh2,611.786.
The depreciation of the Tanzanian shilling against the US dollar can be attributed to several factors, including heightened demand for dollars driven by increased imports and seasonal economic pressures. While the specific decline may be temporary, the broader economic implications are significant, including rising costs for imported goods and potential inflationary effects. Experts suggest that stabilization may occur soon, but continued monitoring is essential to assess the long-term impacts.
Original Source: www.thecitizen.co.tz
