Tanzania’s currency remained relatively stable with gradual appreciation, while Kenya’s and Burundi’s currencies showed significant depreciation. Uganda’s Shilling exhibited stability with minor fluctuations, and Rwanda’s Franc appreciated steadily. These trends reflect different economic conditions across the region, with varying impacts on trade, inflation, and overall economic health.

Tanzania

• 2020–2023 Exchange Rates: The Tanzanian Shilling (TZS) has shown minimal fluctuations in value relative to the US Dollar over the past four years. The exchange rate increased slightly from TZS 2,288.21 in 2019 to TZS 2,383.00 in 2023.
• Percentage Changes:
  • 2019–2020: 0.26% increase
  • 2020–2021: 0.16% increase
  • 2021–2022: 0.23% increase
  • 2022–2023: 3.47% increase
• Analysis: The Tanzanian Shilling has experienced relatively stable but gradual appreciation, with a notable increase in 2023. This stability suggests a controlled inflation environment and consistent economic conditions.

Kenya

• 2020–2023 Exchange Rates: The Kenyan Shilling (KES) saw a significant increase in value against the US Dollar, from KES 101.99 in 2019 to KES 139.90 in 2023.
• Percentage Changes:
  • 2019–2020: 4.38% increase
  • 2020–2021: 2.99% increase
  • 2021–2022: 7.51% increase
  • 2022–2023: 18.69% increase
• Analysis: The Kenyan Shilling depreciated consistently over the period, with the most significant depreciation occurring in 2023. This trend indicates possible economic challenges, such as inflation or balance of payments issues.

Uganda

• 2020–2023 Exchange Rates: The Ugandan Shilling (UGX) showed a slight appreciation over the years, moving from UGX 3,699.24 in 2019 to UGX 3,725.86 in 2023.
• Percentage Changes:
  • 2019–2020: 0.31% increase
  • 2020–2021: -3.51% decrease
  • 2021–2022: 2.84% increase
  • 2022–2023: 1.18% increase
• Analysis: The Ugandan Shilling exhibited relatively stable behavior with minor fluctuations. The overall trend suggests a balanced economic situation with modest changes in currency value.

Rwanda

• 2020–2023 Exchange Rates: The Rwandan Franc (RWF) saw a steady increase in value from RWF 899.35 in 2019 to RWF 1,160.00 in 2023.
• Percentage Changes:
  • 2019–2020: 4.88% increase
  • 2020–2021: 4.84% increase
  • 2021–2022: 4.19% increase
  • 2022–2023: 12.59% increase
• Analysis: The Rwandan Franc has appreciated consistently over the years, with a notable increase in 2023. This could reflect strong economic performance or effective monetary policies.

Burundi

• 2020–2023 Exchange Rates: The Burundian Franc (BIF) depreciated significantly from BIF 1,845.62 in 2019 to BIF 2,564.30 in 2023.
• Percentage Changes:
  • 2019–2020: 3.76% increase
  • 2020–2021: 3.18% increase
  • 2021–2022: 2.96% increase
  • 2022–2023: 26.05% increase
• Analysis: The Burundian Franc experienced significant depreciation, particularly in 2023. This could indicate severe inflationary pressures or economic instability.

The exchange rate trends for the Tanzanian Shilling (TZS) from 2020 to 2023

The exchange rate trends for Tanzania indicate a relatively stable and appreciating currency, reflecting a controlled inflation environment and steady economic performance. This stability is favorable for economic planning, investment, and overall economic health. Compared to its East African neighbors, Tanzania's currency stability suggests a positive economic trajectory, possibly supported by effective monetary policies and economic reforms.

Stability and Gradual Appreciation

1. Stable Currency Value: The Tanzanian Shilling has remained relatively stable over the years, with minimal fluctuations. The exchange rate increased from TZS 2,288.21 in 2019 to TZS 2,383.00 in 2023. This stability suggests a controlled and steady economic environment, which is beneficial for long-term economic planning and investment.
2. Gradual Appreciation: The slight but consistent appreciation of the Tanzanian Shilling, particularly the 3.47% increase from 2022 to 2023, indicates a positive trend. This could reflect improvements in Tanzania's economic fundamentals, such as a stronger balance of payments, controlled inflation, or enhanced investor confidence.

Economic Indicators and Implications

1. Controlled Inflation: The stability and gradual appreciation of the TZS suggest that inflation has been relatively controlled. In many cases, currency depreciation is a result of high inflation; the modest appreciation of the TZS implies that inflation rates have been managed effectively.
2. Economic Growth: Stable currency values can be a sign of steady economic growth. The Tanzanian economy's ability to maintain a stable currency amidst global economic fluctuations suggests resilience and steady economic development. It could also be an indicator of positive economic policies or reforms that support economic stability.
3. Investor Confidence: A stable and appreciating currency often boosts investor confidence. It signals a predictable economic environment, which is attractive to both domestic and foreign investors. Tanzania's steady exchange rate could be contributing to increased foreign direct investment (FDI) and business activities.

Comparative Analysis

1. Regional Context: Compared to other East African countries, Tanzania's currency has shown less volatility. For instance, Kenya's Shilling has depreciated significantly, and Burundi's Franc has experienced substantial depreciation. Tanzania's stable currency suggests that it might be performing relatively better in terms of economic stability compared to its neighbors.
2. Economic Resilience: In the context of East Africa, where many countries are experiencing currency depreciation, Tanzania's stability might reflect stronger economic policies or resilience against external economic shocks. This relative strength can enhance Tanzania's position as a stable investment destination in the region.