Dar es Salaam. The Tanzanian shilling has historically weakened in the run-up to general elections, often depreciating sharply against major currencies. This pattern was clear during both the 2015 and 2020 polls.
In 2015, the local unit dropped from Sh1,754.7 per US dollar in January to Sh2,180.1 in October in the Interbank Foreign Exchange Market (IFEM).
Ahead of the 2020 elections, the shilling slid from Sh2,258.2 in March 2018 to Sh2,300.46 a year later, weakening further to Sh2,309.06 at the height of the campaign season in the IFEM.
At the time, authorities were compelled to intervene, closing several bureaux de change after discovering widespread breaches of regulations.
This year, however, the picture looks strikingly different as Tanzania heads towards the 2025 polls.
According to Bank of Tanzania (BoT) figures, the shilling, which averaged Sh2,666.79 per US dollar in June 2025, has since strengthened to an indicative rate of Sh2,257.05/2,481.63.
Experts and officials attribute the rare stability during an election year to tighter fiscal and monetary management, increased foreign exchange inflows, improved export performance and a climate of investor confidence.
Policy discipline at the core
BoT Governor Emmanuel Tutuba said the currency’s resilience reflects a coordinated mix of measures.
“Strategic monetary policy, supported by effective fiscal management, has ensured a steady supply of US dollars in the formal market,” Mr Tutuba told The Citizen. “We’ve kept liquidity, interest rates, and inflation within target ranges, all of which underpin shilling stability.”
He cited stronger inflows from tourism, mining and agriculture as key factors. “Export earnings from gold, tobacco, fruits and vegetables are growing steadily.
Tourism is also rebounding strongly post-pandemic, and every visitor brings in much-needed dollars,” he said, attributing the situation to an enabling environment that allows businesses to thrive and a decision by the Samia Suluhu Hassan administration to inject funds on purchasing gold for foreign reserve purposes.
Tanzania, one of Africa’s leading gold producers, has benefitted from record global prices, with gold now trading at about $3,559 per ounce. The central bank has stepped up local purchases to build reserves and reduce reliance on hard currencies.
“Gold and tourism are the two pillars driving our forex position,” Mr Tutuba added.
Narrowing trade deficit
Mr Tutuba also pointed to a smaller trade deficit, which now stands at just 2.6 percent of GDP, thanks to exports outpacing imports.
“This improvement in the balance of payments is a key driver of the shilling’s strength,” he said.
The BoT has tightened market oversight to curb black-market trading. New rules require anyone holding more than $1 million to sell it through commercial banks on the interbank market, ensuring liquidity benefits the formal system.
A 2025 law requiring all domestic transactions to be settled in shillings has further reduced demand for foreign currencies. “Enforcing the law on the use of local currency in domestic transactions has eased pressure on the dollar,” the governor said.
Investor confidence on the rise
Analysts say international and domestic conditions are also contributing. With the US Federal Reserve hiking interest rates, global investors are flocking to gold as a safe-haven asset, indirectly boosting Tanzania’s export earnings.
Independent economist Christopher Makombe described the shilling’s resilience during an election year as highly unusual.
“This time is different,” he said. “High commodity prices, political calm, and limited opposition participation have created an environment of investor confidence.”
He noted that foreign investors are buying into local equities, signalling low policy risk.
“There is no capital flight; instead, we are seeing new inflows. Some investors are even entering the market, showing confidence in both economic and political stability,” he said.
Ongoing investments in strategic projects such as the Julius Nyerere Hydropower Plant are also expected to reduce reliance on imported fuel, lower energy costs, and support the shilling in the medium term.
Global credit rating agency Fitch Ratings has maintained Tanzania’s sovereign rating at B+ with a stable outlook, reinforcing investor trust in the country’s macroeconomic management.
“The policies are working,” Mr Makombe stressed. “We are seeing a stable shilling, low imported inflation, and improving investor sentiment.”
Seasonal boost
Prof Abel Kinyondo of the University of Dar es Salaam’s College of Education (DUCE), highlighted that seasonal trends are also favourable.
“The shilling typically strengthens between April and September during peak tourism,” he explained. “In 2020, Covid-19 halted tourism and suppressed forex inflows. Today, high gold prices and a fully recovered tourism sector are reinforcing the shilling’s strong performance.”
He said the combination of seasonal cycles, stronger commodity prices, and a buoyant services sector is underpinning the local currency.
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