Dar es Salaam. The Bank of Tanzania (BoT) has launched an Electronic Matching System (EMS) for the Interbank Foreign Exchange Market (IFEM), a move expected to enhance transparency, efficiency and price discovery in the country's foreign exchange market.
The new platform replaces a largely manual process under which commercial banks spent hours negotiating foreign currency transactions, matching buyers with sellers and agreeing exchange rates before trades could be completed.
With the introduction of the EMS, banks can now view foreign currency bids and offers in real time, enabling exchange rates to be determined more transparently through market demand and supply.
The digital platform automatically matches buy and sell orders in the wholesale foreign exchange market, reducing uncertainty and speculation while creating a more transparent and rules-based trading environment.
BoT Director of Financial Markets, Mr Emmanuel Akaro, said the system forms part of the central bank's broader efforts to modernise financial market infrastructure and align it with international best practices.
He said the platform is expected to improve market liquidity, enhance efficiency in foreign exchange trading and strengthen confidence among market participants as Tanzania continues implementing financial sector reforms.
"The initiative is an important milestone in the ongoing reforms aimed at improving transparency, efficiency and credibility in the foreign exchange market," said Mr Akaro.
"The platform will strengthen price discovery and provide market participants with a fair and orderly trading environment."
According to him, the initiative is modelled on globally recognised market technologies and supports Tanzania's ambition of building a modern and competitive financial sector capable of supporting economic growth and the aspirations outlined in Vision 2050.
The system will serve as a central platform for matching foreign exchange transactions among banks and other authorised market participants.
So far, 29 of the country's 32 commercial banks have joined the platform, while the remaining three are finalising the necessary procedures and are expected to begin participating within the week.
Under the arrangement, commercial banks and major exporters will be able to participate directly in the market.
Non-bank participants will be allowed to sell foreign currency through the platform, while purchases will continue to be conducted through commercial banks.
The central bank said the system currently supports spot foreign exchange transactions involving the Tanzanian shilling and the US dollar, with settlements completed within two business days.
The minimum transaction size has been set at $100,000, with subsequent orders increasing in fixed multiples.
BoT Deputy Governor Mr Yamungu Kayandabila described the launch as a major step in the country's ongoing financial market reforms, saying it would strengthen transparency, efficiency and price discovery in the foreign exchange market.
He noted that Tanzania has made significant progress in strengthening its financial markets through reforms, including the introduction of a new code of conduct and foreign exchange market policies, helping narrow the gap with more developed financial markets.
ACI Financial Markets Association (ACI FMA) Vice President Ms Catherine Mwita welcomed the introduction of the EMS, describing it as an important tool for emerging markets.
She said the platform would improve liquidity in the foreign exchange market, benefiting both market makers and market takers while contributing to the development of a more efficient financial market.
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