As of June 2025, the Tanzania Shilling (TZS) depreciated by 9.6% year-on-year against the US dollar, from 2,345.38 (June 2024) to 2,569.46, reflecting sustained import demand, foreign currency shortages, and global USD strength. Despite this, the monthly change was only -0.2%, signaling short-term exchange rate stability. The Bureau de Change market showed a tight spread (Buy: 2,574.33 / Sell: 2,582.67), reinforcing retail-level confidence. The Shilling also weakened against other major currencies: EUR (-10.4%), GBP (-9.7%), CNY (-10.2%), and JPY (-10.3%). Meanwhile, BoT interventions (e.g., USD 7 million in January) and robust foreign reserves (USD 5.3 billion, 4.3 months import cover) helped maintain market orderliness. However, strong imports (e.g., Zanzibar: USD 459.5 million, driven by infrastructure goods) and falling exports (e.g., cloves: -27.2%) kept pressure on the TZS. To counter depreciation risks, policy must focus on export diversification, import substitution, and regional trade resilience.

1. Overview: Exchange Rate Performance (as of June 2025)

The Tanzanian Shilling’s exchange rate performance reflects its value against major currencies in the Interbank Foreign Exchange Market (IFEM) and Bureau de Change markets, influenced by domestic and global economic factors.

• Official Market (IFEM):
  • USD/TZS Rate:
    • June 2024: 2,345.38
    • May 2025: 2,565.08
    • June 2025: 2,569.46
    • 12-Month Change: -9.6% (depreciation, i.e., more TZS per USD).
  • Monthly Change: -0.2% from May 2025 (2,565.08 to 2,569.46), indicating relative short-term stability.
  • Context: The 9.6% year-on-year depreciation aligns with earlier trends, such as a 9% depreciation in 2024 and an 8% depreciation in 2023. However, the TZS showed signs of stabilization in late 2024, with a slight appreciation of 0.28% in October 2024 and a 2.6% annual appreciation by January 2025, driven by improved export inflows (e.g., gold, cashew nuts, tourism). The June 2025 depreciation reflects renewed pressures from import demand and global USD strength.
  • Drivers:
    • Strong Import Demand: Imports of goods rose to USD 459.5 million in Zanzibar alone, driven by capital goods (USD 222.5 million) for infrastructure projects like the Standard Gauge Railway (SGR) and port expansions. Mainland Tanzania’s imports also increased, with capital and intermediate goods dominating.
    • Lower-than-Expected Forex Inflows: Goods exports in Zanzibar fell to USD 150.3 million (-11.9%), particularly cloves (-27.2%). While Mainland Tanzania’s exports grew 16.8% to USD 16.7 billion by April 2025, inflows from gold (USD 3,369.7 million) and tourism (USD 6,948.2 million) were insufficient to offset import pressures.
    • Global USD Strengthening: The USD appreciated globally due to U.S. monetary tightening and demand for USD-denominated assets, impacting emerging market currencies like the TZS.
  • Stability Assessment: Despite the 9.6% depreciation, the TZS remained “orderly and market-driven,” with no sharp volatility, as noted in the BoT review. BoT interventions, such as selling USD 7 million in January 2025, and robust reserves (USD 5,307.7 million, 4.3 months of import cover) supported stability.
• Bureau de Change Market:
  • June 2025 Rates:
    • Buying Rate: 2,574.33 TZS/USD
    • Selling Rate: 2,582.67 TZS/USD
  • Context: The narrow spread (0.3%) between buying and selling rates indicates a liquid and stable retail market, consistent with earlier data (e.g., 2,454.04 TZS/USD in January 2025). The slightly higher Bureau rates compared to IFEM (2,569.46) reflect retail markups but align with market-driven pricing.
  • Implications: The stable Bureau market supports confidence in the TZS for domestic transactions, with only 3.2% of Mainland businesses and 4.5% in Zanzibar quoting in USD, indicating low dollarization.
• Interpretation:
  • The 9.6% depreciation reflects structural pressures from import reliance and global USD strength, but short-term stability (-0.2% monthly change) and BoT interventions mitigate volatility.
  • The TZS’s performance aligns with regional trends, where currencies like Kenya’s Shilling (9% depreciation in 2024) faced similar pressures, though Tanzania’s stability is notable compared to Burundi’s significant depreciation.
  • Policy measures, including export promotion and reserve management, are critical to manage depreciation pressures.

2. Other Currency Exchange Rates (June 2025)

The TZS’s performance against other major currencies provides a broader view of its depreciation trend.

• Exchange Rates (June 2025):

• Context:
  • EUR/TZS: The 10.4% depreciation is slightly higher than USD/TZS, reflecting Eurozone economic resilience and demand for EUR-denominated assets. In April 2023, EUR/TZS was 2,549.80, indicating a gradual weakening.
  • GBP/TZS: The 9.7% depreciation aligns with USD trends, with GBP/TZS at 2,876.45 in April 2023, showing consistent TZS weakening.
  • JPY/TZS: The 10.3% depreciation reflects Japan’s monetary policy shifts, with JPY/TZS not detailed in earlier reports but consistent with global trends.
  • CNY/TZS: The 10.2% depreciation aligns with China’s economic slowdown and reduced demand for TZS in bilateral trade, compared to 334.23 CNY/TZS in April 2023.
  • Estimated June 2024 Rates (based on Y-o-Y changes):
    • EUR: ~2,503 TZS (from summary table).
    • GBP: ~2,961 TZS.
    • CNY: ~320.9 TZS.
  • Regional Comparison: The TZS’s broad-based depreciation contrasts with Rwanda’s Franc appreciation and Uganda’s Shilling stability (2020–2023), highlighting Tanzania’s import-driven pressures.
• Drivers:
  • Global Currency Strength: Major currencies appreciated due to tighter monetary policies in the U.S., Eurozone, and Japan, increasing demand for USD, EUR, and GBP.
  • Trade Dynamics: Tanzania’s trade with China (6.3% of external debt in CNY) and Europe (16.1% in EUR) increased TZS demand for imports, weakening the currency.
  • Export Shortfalls: Zanzibar’s clove exports fell 27.2% to USD 66.4 million, and while Mainland exports grew, they couldn’t fully offset import costs.
• Implications:
  • The broad-based depreciation (-9.6% to -10.4%) indicates systemic pressures rather than USD-specific factors, impacting import costs (e.g., petroleum, machinery).
  • The TZS’s stability against regional currencies (e.g., Kenyan Shilling) supports Tanzania’s competitiveness in East African trade, but global depreciation raises debt servicing costs (68.1% USD-denominated debt).

3. Forex Market Activity

Forex market activity in the IFEM reflects demand and supply dynamics for foreign exchange, influencing TZS stability.

• Interbank Foreign Exchange Market (IFEM):
  • Transaction Volume (June 2025): USD 65.4 million.
  • Change: +12.6% from USD 58.1 million in May 2025.
  • Year-on-Year: Compared to USD 16.3 million in January 2025 and USD 95.7 million in December 2024, June 2025’s volume indicates seasonal peaks, likely tied to trade settlements and imports.
  • Context: Increased volume reflects heightened demand for USD, driven by:
    • Trade Settlements: Imports of capital goods (USD 222.5 million in Zanzibar) and consumer goods for Q2 2025 trade.
    • Seasonal Imports: Agricultural inputs and infrastructure-related imports (e.g., SGR, TAZARA Railway).
    • Debt Servicing: External debt servicing (USD 32,090.0 million disbursed) requires USD inflows.
  • BoT Interventions: The BoT sold USD 7 million in January 2025 to stabilize the TZS, and similar interventions likely occurred in June 2025, given the orderly market noted in the review.
• Implications:
  • The 12.6% volume increase signals robust market activity but also pressure on the TZS, as higher USD demand drives depreciation.
  • BoT’s reserve management (USD 5,307.7 million) and interventions ensure stability, but sustained import demand requires export growth to balance forex flows.
  • The liquid IFEM and Bureau markets support confidence, with no evidence of dollarization (only 0.1% of Mainland businesses prefer USD payments).

Summary Table: TZS Exchange Rate Trends

Key Insights and Policy Implications

1. Moderate Depreciation:
   • The TZS’s 9.6% depreciation against the USD and 9.7%–10.4% against other currencies reflects structural import reliance and global USD strength. However, the -0.2% monthly change from May to June 2025 indicates short-term stability, supported by BoT interventions.
   • Policy: Enhance export diversification (e.g., seafood, manufactured goods) to boost forex inflows, as per Zanzibar’s USD 2 billion plan. Leverage AfCFTA to expand markets.
2. Market Stability:
   • The orderly, market-driven TZS performance, with no sharp volatility, aligns with earlier stabilization (e.g., 0.28% appreciation in October 2024). Robust reserves (USD 5,307.7 million) and a liquid IFEM (USD 65.4 million volume) support confidence.
   • Policy: Continue BoT interventions (e.g., USD sales) and reserve accumulation to manage seasonal pressures, as seen in January 2025.
3. Import-Driven Pressures:
   • Strong import demand (USD 459.5 million in Zanzibar, Mainland capital goods) outpaced export growth, driving depreciation. Zanzibar’s 27.2% clove export drop exacerbated pressures.
   • Policy: Promote import substitution (e.g., local manufacturing) and agricultural productivity to reduce reliance on imported goods, aligning with Vision 2050.
4. Global and Regional Context:
   • The TZS’s depreciation mirrors regional trends (e.g., Kenya’s 9% depreciation in 2024), but Tanzania’s stability contrasts with Burundi’s significant depreciation. Global USD strength, driven by U.S. policy, impacts emerging markets broadly.
   • Policy: Strengthen trade ties with EAC partners (e.g., Rwanda, Uganda) to stabilize TZS against regional currencies.
5. Economic Impacts:
   • Debt Servicing: With 68.1% of external debt in USD (USD 33,905.1 million), depreciation raises servicing costs, absorbing ~40% of government expenditures.
   • Inflation: Depreciation contributed to Zanzibar’s 3.4% inflation (June 2025) and Mainland’s 3.2% (May 2025), driven by imported goods like petroleum.
   • Trade Competitiveness: Depreciation enhances export competitiveness (e.g., gold, cashew nuts), but falling clove exports limit gains.
   • Policy: Maintain the 6% Central Bank Rate to control inflation (3%–4% target in 2025) and explore debt restructuring to ease USD pressures.
6. Economic Context:
   • GDP Growth: Tanzania’s 5.6% growth in 2024 and projected 6% in 2025 support export performance, driven by tourism (2.2 million arrivals) and infrastructure.
   • Reserves: USD 5,307.7 million (4.3 months of import cover) provide a buffer against volatility, up from USD 5,323.6 million in January 2025.
   • Risks: Global commodity price volatility, USD strength, and election-related uncertainties (October 2025) pose risks to TZS stability.
   • Opportunities: Tourism receipts (USD 6,948.2 million), FDI (USD 3.7 billion in 2025), and IMF disbursements (USD 148.6 million in 2024) support forex inflows.