Tanzanian central bank defuses tension over sliding shilling against major currencies

Source: Xinhua| 2019-01-31 00:07:43|Editor: yan
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ARUSHA, Tanzania, Jan. 30 (Xinhua) -- The Bank of Tanzania (BoT) on Wednesday moved to clarify reasons behind recent depreciation of the Tanzanian shilling against the U.S. dollar, attributing it to a fall in foreign exchange earnings.

A statement released by the country's central bank also sought to defuse tension against the backdrop of discussions in newspapers and social media, with fears that the shilling was in crisis due to foreign exchange reserves being inadequate.

"The Bank of Tanzania wishes to inform the public that the current movement in the exchange rate is a seasonal phenomenon related to low foreign exchange earnings from tourism and export crops," reads the statement in part.

BoT, the country's finance sector regulator, said the depreciation of the shilling is a common trend that usually normalizes in the second half of the year when earnings from tourism and exports pick up.

"In addition, the U.S. dollar has recently been appreciating against major currencies. The Bank of Tanzania also wishes to inform the public that the country has adequate foreign exchange reserves, which are sufficient to cover 4.9 months of imports of goods and services," the statement intoned.

"It should be noted that exchange rate in Tanzania is determined in the market based on demand and supply of foreign exchange. The BoT periodically participates in the market to smooth out volatilities in the exchange rate that are not in line with economic fundamentals."

BoT will continue to monitor developments in exchange rates with a view to ensure that participants in the foreign exchange market adhere to rules and regulations governing the market, the statement added.

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