In an attempt to tackle shortages that have plagued Tanzania since 2022, the Bank of Tanzania states that it will start selling US dollars to commercial banks.
According to a statement by the bank, “the initiative aims to ensure adequate foreign currency liquidity in the market. In addition, it intends to ensure customers’ demand for foreign currency is met through licensed financial institutions at the prevailing market prices”.
The goal here is to change the dynamics of the sale and purchase of the dollar in the country. As originally, the central bank buys dollars, but as of now, will begin selling dollars. A move designed to possibly push the hoarded dollars back into circulation and eliminate the black market, which has done nothing but worsen the dollar situation in the country.
In 2023, the foreign exchange reserves of the bank saw a decline to $4.9 billion in May 2023, from the previously recorded $5.5 billion recorded the year before. According to the bank, this was a result of the COVID-19 pandemic, increased US interest rates, the Russia-Ukraine conflict, and, surprisingly, climate change.
This February, the Bank of Tanzania launched a series of Treasury bond auctions to enable the bank to manage its domestic debt and improve the money supply chain during the shortages. The treasury bonds are said to have maturities of 10,15,20,25 years by the end of 2024.
