By Alfred Zacharia
The Bank of Tanzania (BoT) has intervened in the Interbank Foreign Exchange Market (IFEM) by selling $25 million through an auction, a move aimed at addressing foreign exchange liquidity and stabilizing the Tanzanian shilling.
A public notice issued by the BoT’s Directorate of Financial Markets on March 27, 2025, stated that the intervention was conducted in line with the Foreign Exchange Intervention Policy, 2023.
The auction was executed at a weighted average exchange rate of Sh2,663.16 per US dollar.
The results indicate a strong demand for foreign currency, as the total tendered amount reached $75.25 million—three times the amount offered.
“Eight banks were successful in securing bids from a total of 25 participants,” the BoT noted in its statement.
The highest bid rate recorded during the auction was Sh2,670.00 per USD, while the lowest stood at Sh2,640.00. The accepted range fell between Sh2,658.20 and Sh2,670.00, reflecting market dynamics in forex trading.
Analysts suggest that BoT’s intervention plays a crucial role in managing exchange rate fluctuations and ensuring market liquidity.
“By injecting dollars into the system, the central bank is addressing short-term imbalances and preventing excessive volatility in the foreign exchange market,” said a financial analyst familiar with Tanzania’s forex policies.
This latest move raises key questions about its broader impact on Tanzania’s economy. A stable exchange rate is critical for businesses reliant on imports and exports, as well as for maintaining inflation at manageable levels.
“Such interventions send a strong signal that BoT is committed to safeguarding the value of the shilling and ensuring a well-functioning financial system,” added an economist from a local financial institution.
However, frequent interventions could indicate underlying structural issues in the forex market, prompting the need for long-term strategies.
With ongoing macroeconomic challenges, including external shocks affecting currency performance, BoT’s strategic actions will be closely watched by investors and policymakers to assess their effectiveness in maintaining a stable foreign exchange market.