Most of the key measures are within the capacity of the central bank to implement and aim at reducing the amount of local currency in the economy. At the same time, they should be able to increase the supply of foreign currency in the economy.
The measures should result, not only into a stronger shilling, but would also reduce the rate of price increase.
The shilling has been continually falling since the beginning of the year and traded at Sh1,765 to the dollar last week and gained slightly to trade at Sh1,688 early this week. Experts say it is likely that the Tanzanian shilling could trade at Sh2,000 to the dollar by end of the year!
The annual headline inflation in the year ending September stood at 16.8 per cent, rising from 6.4 per cent in January. The situation has made life more expensive to Tanzanians.
It costs more than ever before to put food on the table, for example, and pay school fees, more so if one is sending one's children abroad or the local "international" schools that charge in dollars.
Causes of a weaker shilling and high inflation are many, but the most obvious are the power crisis which went wild for most of this year, drought and the failure to bridge the gap between imports and exports.
These factors demand more action and coordinated efforts from both the private and public sectors. The measures being taken by BoT are temporary and might not yield the desired results. Efforts must be made to increase food supply as well as exports for a sustainable strengthening of the Tanzanian shilling.
source:The Citizen
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