Africa's Strongest Currencies: The Top 10

According to the latest data from December 2025, the currency landscape in Africa shows significant disparities. The Tunisian Dinar (TND) leads as the strongest currency in Africa, with 1 TND ≈ 0.34 USD (or approximately 1 USD ≈ 2.94 TND). This strength is attributed to Tunisia's monetary discipline, controlled inflation, and restrictions on capital outflows.

Tanzania Shilling's Position in Africa and East Africa

The Tanzania Shilling (TZS) is among the weaker currencies in Africa nominally. As of late December 2025, 1 USD ≈ 2,473 TZS (or 1 TZS ≈ 0.000404 USD). This places it far below the top ranks, even weaker than lower entries like the Kenyan Shilling at approximately 0.0077 USD per unit.

Comparison with East African and Selected African Currencies

In East Africa (EAC members): TZS is relatively stable but nominally weaker than the Kenyan Shilling (KES). Uganda (UGX) and Burundi (BIF) are even weaker, with typical values of 1 UGX ≈ 0.00027 USD. Ethiopia's Birr is also considered weak in nominal terms.

The 2025 Volatility: A Year of Challenges and Stabilization

The Tanzania Shilling (TZS) experienced notable volatility throughout 2025, weakening significantly in the first half of the year before stabilizing and even slightly appreciating toward the end. The shilling peaked at around 1 USD ≈ 2,700 TZS in mid-2025, making it briefly the world's worst-performing currency, before recovering to approximately 2,473 TZS by late December 2025. This represents an overall annual depreciation of about 3.5% compared to the start of the year.

Main Reasons for the Weakening Throughout 2025

Several interconnected factors drove the day-to-day and monthly pressures on the TZS:

1. High Demand for Imports: Tanzania's rapid economic growth (around 6% GDP in 2025) and major infrastructure projects led to a surge in imports of capital goods, fuel, machinery, and consumer items. Imports rose by about 5% year-on-year early in 2025, creating persistent dollar demand and straining foreign exchange reserves.
2. Seasonal and Cyclical Pressures: Periodic spikes occurred due to seasonal factors, such as increased imports ahead of Ramadan, Chinese New Year supply chains, or post-tourism peak lulls in forex inflows from tourism and cash crops.
3. Widening Current Account Deficit: Projected at around 3.2% of GDP in 2025, driven by higher imports outpacing export growth despite strong performances in gold (up 38% in value) and other commodities.
4. Global USD Strength and External Shocks: Lingering effects from prior US interest rate hikes and geopolitical tensions made the dollar stronger globally, putting pressure on emerging market currencies like the TZS.
5. Infrastructure-Driven Debt and Spending: Aggressive public investments increased national debt servicing needs (much in USD) and import bills, compounding forex outflows.

Factors That Helped Stabilization in Late 2025

• Bank of Tanzania (BoT) Interventions: The central bank injected over USD 175 million via forex auctions and sales, building reserves to comfortable levels (covering approximately 4-5 months of imports).
• Surge in Export Earnings: Particularly gold (reaching USD 4.59 billion by October) and tourism recovery, boosting forex inflows.
• Policy Measures: Bans on dollarization (requiring local transactions in TZS only) and prudent monetary policy (holding policy rate at 5.75%) helped curb speculation and maintain low inflation (approximately 3-3.5%).

Outlook for 2026: What Can We Expect?

The outlook is generally positive for relative stability or modest depreciation, supported by Tanzania's strong fundamentals:

Key Projections and Drivers

• Continued Economic Growth: IMF and World Bank project GDP growth of 6.0-6.4% in 2026, driven by infrastructure completion, mining expansion (new gold mines), natural gas projects, and agriculture/tourism.
• Expected Depreciation Rate: Analysts forecast a milder approximately 3-4% weakening (similar to or less than 2025), assuming no major shocks.

Supporting Factors for 2026

• Higher export revenues from commodities and FDI inflows
• Adequate forex reserves and ongoing BoT vigilance
• Low and stable inflation (target 3-5%)
• Potential benefits from global easing if US rates fall further

Risks to Watch in 2026

• Global commodity price drops or renewed USD strength
• Election-related speculation (though 2025 elections passed smoothly)
• Climate events affecting agriculture/exports
• Delays in major projects increasing import/debt pressures

Overall, while the TZS is likely to face some ongoing nominal weakening due to Tanzania's import-dependent growth model, 2026 should see greater stability than the volatile first half of 2025, with long-term benefits from investments potentially strengthening the currency in real terms over time.

Global and Regional Context

Global factors have also played a significant role in the shilling's performance. The continued strength of the US dollar, driven by high interest rates and global risk aversion, placed pressure on emerging and frontier market currencies throughout 2025. Tanzania was not immune to these global dynamics.

Countries with stronger currencies, such as Tunisia and Libya, rely heavily on controlled foreign exchange systems, oil revenues, or strict limits on currency convertibility, which support nominal currency strength but do not necessarily reflect broader economic resilience or long-term sustainability.

The Trade-Off: Currency Strength vs. Economic Flexibility

Importantly, the shilling's weaker position does not necessarily imply economic failure. Unlike some of Africa's strongest currencies, Tanzania operates a more flexible and market-responsive exchange rate system, which absorbs shocks rather than masking them.

Key indicators of macroeconomic stability in 2025 include:

• Inflation: Remained relatively low at around 3-3.5%
• Foreign Exchange Reserves: Improved to cover 4-5 months of imports
• GDP Growth: Strong at approximately 6%
• Gold Exports: Reached USD 4.59 billion by October 2025

Therefore, the gap between the Tanzania Shilling and Africa's strongest currencies is best explained by structural trade dynamics, policy choices, and openness to global markets, rather than short-term mismanagement.

Policy Implications and the Path Forward

Understanding why the Tanzania Shilling lags behind Africa's strongest currencies is essential not only for policymakers, but also for investors, businesses, and the public. It underscores the trade-offs between currency strength, economic openness, and long-term growth, and frames the broader debate on whether nominal currency strength should be the ultimate benchmark for economic success in Tanzania's development trajectory.

Key Policy Considerations

1. Export Diversification: While gold exports have been strong, Tanzania needs to diversify its export base to reduce dependence on commodity price fluctuations.
2. Import Substitution: Strategic investments in local manufacturing and production capacity could reduce the persistent demand for foreign exchange.
3. Infrastructure Completion: Completing ongoing infrastructure projects will eventually reduce import demand for capital goods and machinery.
4. Tourism Enhancement: Continued recovery and growth in tourism provides valuable foreign exchange inflows.
5. Monetary Policy Balance: The Bank of Tanzania's interventions and prudent monetary policy have proven effective in maintaining stability.

Conclusion: Strength Beyond the Exchange Rate

In conclusion, the Tanzania Shilling's position behind Africa's strongest currencies is largely the result of structural economic realities rather than economic weakness. Tanzania's import-driven growth model, expanding infrastructure investments, and rising demand for foreign exchange naturally exert downward pressure on the shilling, while countries with stronger nominal currencies often rely on strict currency controls, limited convertibility, or resource-based inflows that artificially support exchange rates.

Despite episodes of volatility in 2025, the shilling demonstrated resilience through effective Bank of Tanzania interventions, low and stable inflation of around 3-3.5%, improving foreign exchange reserves covering 4-5 months of imports, and strong export performance in gold and tourism.

Therefore, while the TZS remains weak in nominal terms, it reflects a more open, flexible, and growth-oriented economy. The real policy challenge for Tanzania is not merely strengthening the currency's face value, but deepening export diversification, reducing import dependence, and sustaining macroeconomic stability, which over time will enhance the shilling's real strength and long-term economic credibility.