THE Tanzanian Shilling has emerged as one of Africa’s top performing currencies against the US dollar in the second quarter of 2025, buoyed by a significant surge in foreign exchange inflows from key sectors and robust macroeconomic management by the Bank of Tanzania (BoT).

This rally marks a notable turnaround for the local currency, which had experienced some depreciation earlier in the year. The central bank last Friday quoted the shilling at 2,570/2,596 to the dollar, an appreciation from 2,586/2,612 at the start of March which reflects increasing confidence in Tanzania’s economic stability and a healthy influx of hard currency into the coffers.

Bank of Tanzania (BoT)’s Director of Financial Markets, Emmanuel Akaro said in an interview that the primary driver of the shilling’s strength has been the sustained high global prices for gold and a surge in inflow of US dollars from agriculture, tourism and transport sectors.

Tanzania, a prominent gold producer in Africa, has reaped a substantial revenue windfall from the precious metal. Gold has experienced a meteoric rise of over 40 per cent since the end of 2023, with prices reaching 3,000 US dollars per ounce in mid-March 2025.

This reflects the shifting demand for gold as a financial asset, with some forecasts from sources like Discovery Alert and JP Morgan indicating peaks as high as 3,500 US dollars per ounce.

ALSO READ: Government grabs pest threat by the horns

Presenting the state of the economy for 2024 in Parliament last week, the Minister of State in the President’s Office (Planning and Investments), Prof Kitila Mkumbo, stated that gold production last year reached 61,680.81 kilogrammes, up from 54,760.32 kilogrammes in 2023, an increase of 12.6 per cent.

He attributed this rise to increased mining activities, stimulated by the surging global gold price where the average global gold price reached 2,384.8 US dollars per ounce in 2024, up from 1,940.5 US dollars per ounce in 2023. Booming Tourism Sector Tourism is among the key drivers of growth in Tanzania, with its impact translating into a persistent increase in foreign exchange earnings.

The sector has witnessed record-breaking arrivals, with over 2.16 million visitors by April 2025, surpassing pre-pandemic levels and generating substantial tourism receipts. In 2024, the tourism sector experienced significant growth, with earnings reaching 3.9 billion US dollars, a substantial increase from 3.37 billion US dollars in 2023 and 2.5 billion US dollars in 2022.

Strong agricultural and transport exports Tanzania’s cash crop exports, including coffee and cashew nuts, have performed strongly, significantly contributing to the nation’s dollar reserves.

In 2024, the value of exported goods was 9,121.6 million US dollars compared to 7,696.6 million US dollars in 2023, equivalent to an increase of 18.5 per cent.

This was contributed by an increase in exports of traditional goods, particularly cashews, tobacco and coffee, as well as non-traditional goods including gold, vegetable products, flowers and oilseeds. Similarly, the transport sector has added to the growing inflow of US dollars, further bolstering the shilling’s position.

This diversification of foreign exchange sources underscores a resilient and expanding economy, less reliant on a single commodity or sector. Dr Akaro said the Bank of Tanzania’s proactive approach to foreign exchange management has also played a crucial role. New foreign exchange regulations, introduced in March 2025, have helped channel more foreign currency into the formal market, enhancing liquidity and transparency.

While there was a moderate, seasonal depreciation in April, the BoT’s interventions, including the sale of millions of dollars to meet import demand, have consistently aimed to stabilise the currency. Tanzania’s overall macroeconomic fundamentals remain strong. The country boasts low and stable inflation, currently at around 3.3 per cent yearon-year in March 2025, well within the central bank’s target.

ALSO READ: Investor activity surges across 20 counters

Foreign exchange reserves are adequate, standing at approximately 5.7 billion US dollars as of March 2025, providing a comfortable import cover. The current account deficit has also narrowed significantly, projected to reach 2.6 per cent of GDP in 2024 from 3.8 per cent in 2023, largely due to the robust export performance.

This improvement in the external sector balance further solidifies the shilling’s underlying strength Looking ahead, the Bank of Tanzania and other economic forecasters maintain a positive outlook for the shilling for the remainder of 2025.

With a projected GDP growth of 6.1 per cent for the year and continued strong performance from its leading export sectors, Tanzania is well-positioned for sustained economic stability and a resilient local currency. (Read full interview on Page 17)