In February 2025, the Tanzania shilling remained broadly stable against the US dollar, with only a slight depreciation from TZS 2,560/USD in January to TZS 2,566/USD, marking a modest 0.23% change. Despite this, the interbank foreign exchange market saw a significant increase in activity, with traded volumes rising by 27.4% from USD 57.2 million to USD 72.9 million. This indicates growing demand for foreign currency—likely for imports or external payments—yet the limited impact on the exchange rate reflects strong macroeconomic management, sufficient forex reserves, and sustained confidence in the Tanzanian economy.

Tanzania Monthly Economic Review – March 2025, the Tanzania shilling (TZS) remained relatively stable against the US dollar (USD) in February 2025, with only slight depreciation observed.

Tanzania Shilling Stability Against the USD – February 2025

Exchange Rate Movement:

• February 2025:
  ➤ TZS 2,566.00 per USD
• January 2025:
  ➤ TZS 2,560.00 per USD

 Change:
➤ The shilling depreciated by TZS 6.00, equivalent to 0.23% over the month.

💡Interpretation: What Does This Mean?

• The Tanzania shilling experienced only marginal depreciation, suggesting strong overall currency stability.
• The interbank foreign exchange market was active, with trading volumes increasing from:
  • USD 57.2 million (Jan 2025) to
  • USD 72.9 million (Feb 2025)
    ➤ Increase of 27.4%, indicating rising demand for USD (possibly for imports or debt servicing).

Despite increased forex demand, the shilling held relatively firm, implying:

• Sufficient foreign exchange reserves by the Bank of Tanzania
• Tight monetary and fiscal coordination
• Controlled inflation and disciplined currency management

Summary Table: Shilling vs. USD

The Tanzania shilling remains broadly stable against the US dollar, with only slight depreciation in February 2025 despite increased foreign exchange market activity. This reflects confidence in macroeconomic fundamentals and effective monetary policy management by the Bank of Tanzania.

Tanzania shilling's stability against the US dollar:

What It Tells Us:

1. The Tanzania Shilling Is Stable
   – The exchange rate changed only slightly from TZS 2,560/USD in January to TZS 2,566/USD in February 2025, a depreciation of just 0.23%.
   ➤ This signals that the shilling is not under heavy pressure and is being well-managed by the Bank of Tanzania.
2. Market Demand for USD Is Growing
   – Foreign exchange trading in the interbank market increased from USD 57.2 million to USD 72.9 million—a 27.4% increase.
   ➤ This could reflect rising imports, seasonal corporate demand, or external obligations (like debt service or payments for goods and services).
3. Despite Demand, the Currency Held Steady
   – Even with the increased demand for dollars, the shilling did not weaken significantly.
   ➤ This shows strong supply-side support, likely through foreign reserves or intervention by the central bank.
4. Investor and Market Confidence Remains High
   – A stable exchange rate in the face of higher forex demand typically means:
   • Inflation is under control
   • Interest rates are appropriate
   • The external sector is resilient

✅ Bottom Line:

The slight movement in the exchange rate tells us the Tanzania shilling is stable and well-supported, even as demand for USD rises. This reflects sound economic management, confidence in the local currency, and a resilient foreign exchange system.

In February 2025, Tanzania’s financial markets showed robust activity, with the government securities market attracting TZS 2.05 trillion in bids—well above the TZS 1.16 trillion accepted—indicating strong investor confidence, especially in long-term Treasury bonds. In the interbank cash market, trading rose to TZS 402.2 billion, up from TZS 362.9 billion in January, while the overnight interest rate inched up to 4.03%, reflecting slight liquidity tightening. Meanwhile, the interbank foreign exchange market saw increased trading, with volume rising to USD 72.9 million from USD 57.2 million, and the Tanzanian shilling depreciated slightly to TZS 2,566/USD from TZS 2,560/USD. These trends suggest a stable yet dynamic financial environment shaped by shifting investment strategies and external demand.

Tanzania Monthly Economic Review – March 2025, Insights on Tanzania’s financial market, focusing on:

1. Government Securities Market
2. Interbank Cash Market
3. Interbank Foreign Exchange Market

1. Government Securities Market (February 2025)

Government securities are used by the government to raise money from investors through Treasury bills (short-term) and Treasury bonds (long-term).

Key Figures:

• Total Government Securities Sold:
  ➤ TZS 1,162.5 billion (down from 1,245.4 billion in January)
• Bids Received:
  ➤ TZS 2,051.6 billion – shows high investor appetite
• Bids Accepted:
  ➤ TZS 1,162.5 billion
• Treasury Bills:
  ➤ Sales dropped to TZS 265.9 billion from TZS 402.2 billion
• Treasury Bonds:
  ➤ Sales increased to TZS 896.6 billion from TZS 843.2 billion

💡 Interpretation:
There’s strong demand for government securities (bids exceeded offers), especially long-term bonds. This suggests that investors have confidence in the government’s stability and prefer long-term instruments, possibly due to higher returns.

2. Interbank Cash Market

This is the market where banks lend to each other on a short-term basis to manage their liquidity.

Key Figures (February 2025):

• Total Volume Traded:
  ➤ TZS 402.2 billion, up from TZS 362.9 billion in January
• Average Overnight Interest Rate:
  ➤ 4.03%, slightly up from 3.92%

💡 Interpretation:
The increase in volume traded shows active liquidity management among banks. The slight rise in interest rates suggests tightening liquidity conditions, but rates remain relatively low, indicating a generally stable money market.

3. Interbank Foreign Exchange Market (IFEM)

This is where commercial banks trade foreign currency (mainly USD) among themselves under Bank of Tanzania oversight.

📊 Key Figures (February 2025):

• Total Traded Volume:
  ➤ USD 72.9 million, up from USD 57.2 million in January
• Exchange Rate (TZS/USD):
  ➤ 2,566.00, slightly depreciated from 2,560.00

💡 Interpretation:
The increase in forex traded volume indicates higher demand and activity in foreign exchange, possibly due to trade or debt service needs. The slight depreciation of the shilling reflects modest pressure on the local currency, potentially from import demand or capital outflows.

Summary Table: Key Financial Market Indicators (February 2025)

Tanzania’s financial markets tell us for February 2025, based on the three key segments:

1. Government Securities Market – Strong Investor Confidence, Shift to Long-Term

• The high volume of bids (TZS 2.05 trillion) compared to what was offered shows strong investor interest in government debt.
• A shift from Treasury bills (short-term) to Treasury bonds (long-term)—from TZS 402.2B to 265.9B for bills and TZS 843.2B to 896.6B for bonds—indicates:
  • Investors prefer long-term investments (possibly due to attractive yields).
  • There is confidence in government fiscal stability and interest rate trends.

What it means:
Investors are locking in longer-term returns, expecting stable or declining interest rates and trusting the government's ability to repay.

2. Interbank Cash Market – Active Liquidity Management

• Volume increased from TZS 362.9B to 402.2B, showing banks are actively lending to one another to manage short-term cash needs.
• The slight rise in the overnight rate from 3.92% to 4.03% suggests mild liquidity tightening, but the rate is still low, meaning the market remains well-supplied with funds.

Banks are liquid and trust each other enough to trade funds, which indicates a stable banking system. The Bank of Tanzania may be carefully managing liquidity to avoid inflation or excessive credit growth.

3. Interbank Foreign Exchange Market – Rising Demand for Forex, Slight Shilling Pressure

• Forex volume jumped from USD 57.2M to USD 72.9M, indicating increased foreign currency demand—possibly due to:
  • Import payments
  • External debt service
  • Corporate demand
• The exchange rate weakened slightly from TZS 2,560/USD to 2,566/USD, showing modest pressure on the Tanzanian shilling.

Demand for US dollars is rising—possibly reflecting stronger import activity, or capital outflows. The slight depreciation suggests moderate currency pressure, but still under control.

Overall Takeaway:

• Tanzania’s financial markets are active and relatively stable.
• The government continues to attract strong investor demand, especially for long-term borrowing.
• Banks are managing liquidity effectively, with low interbank rates.
• Forex activity is increasing, hinting at growing external financial transactions, with slight pressure on the exchange rate.