NB: Let us talk about our Holy Currency and not Politics.
While walking today i noticed an exchange board and saw that 1 dollar = 2200/=. Where are we heading? i started asking myself.
in order to know why our currency is heading towards its slaughter, we need to understand few things;
What is exchange rate?
Exchange rate is the price of foreign currency in relation to the local currency.
For example; the price of dollar in relation to Tanzania shilling. The more Tanzania shilling we pay to get a dollar the more the exchange rate increases or rises and as a result the value of shilling in terms of the dollar depreciates
What is Exchange rate depreciation?
means fall in price of domestic currency say Tanzania shilling against the price of foreign currency (dollar) in foreign exchange market. Exchange rate depreciation is caused by the market forces of demand and supply thus if the demand for let say Tanzania shilling decreases due to the decrease in the volume of export the value of shilling will decrease.
Since 1990’s to date the exchange rate of Tanzania shilling is determined by market force of demand and supply. If the exchange rate is left to forces of the market, then it is called floating/free/ flexible exchange rate. The higher the demand of Tanzania shilling in the foreign market, the more appreciation the shilling becomes and vice versa is true. The change in Tanzania shilling exchange rate affect only domestic price and not foreign price of export and import.
Reasons Behind Depreciation of TSHS
1. Election: First of all, I would like to congratulate Hon: Magufuli for becoming The President of United Republic of Tanzania. The truth is elections can result in uncertainty which can spook some people. As a result people bought dollars and plane tickets (for their own safety)
2. Export of Locally Goods: I have seen many local exporters selling goods in dollars instead of shillings. This has affected our currency a lot. This is very serious, the government needs to come up with the solution to ensure local exporters take more of Shillings than other currency.
Measures to be taken to appreciate our Holy Currency
For the price of Tanzania shilling to appreciate measures are required to promote export of locally produced goods. Also we should encourage use of shilling in purchasing goods within the country as some places like Mlimani city and other places like big hotels use dollar in their transaction. This also contribute to depreciation of shillings against dollar.
If our shilling appreciates, the price of export will raise while those of import will fall. As the demand for shilling raise its value will also appreciate.
While walking today i noticed an exchange board and saw that 1 dollar = 2200/=. Where are we heading? i started asking myself.
in order to know why our currency is heading towards its slaughter, we need to understand few things;
What is exchange rate?
Exchange rate is the price of foreign currency in relation to the local currency.
For example; the price of dollar in relation to Tanzania shilling. The more Tanzania shilling we pay to get a dollar the more the exchange rate increases or rises and as a result the value of shilling in terms of the dollar depreciates
What is Exchange rate depreciation?
means fall in price of domestic currency say Tanzania shilling against the price of foreign currency (dollar) in foreign exchange market. Exchange rate depreciation is caused by the market forces of demand and supply thus if the demand for let say Tanzania shilling decreases due to the decrease in the volume of export the value of shilling will decrease.
Since 1990’s to date the exchange rate of Tanzania shilling is determined by market force of demand and supply. If the exchange rate is left to forces of the market, then it is called floating/free/ flexible exchange rate. The higher the demand of Tanzania shilling in the foreign market, the more appreciation the shilling becomes and vice versa is true. The change in Tanzania shilling exchange rate affect only domestic price and not foreign price of export and import.
Reasons Behind Depreciation of TSHS
1. Election: First of all, I would like to congratulate Hon: Magufuli for becoming The President of United Republic of Tanzania. The truth is elections can result in uncertainty which can spook some people. As a result people bought dollars and plane tickets (for their own safety)
2. Export of Locally Goods: I have seen many local exporters selling goods in dollars instead of shillings. This has affected our currency a lot. This is very serious, the government needs to come up with the solution to ensure local exporters take more of Shillings than other currency.
Measures to be taken to appreciate our Holy Currency
For the price of Tanzania shilling to appreciate measures are required to promote export of locally produced goods. Also we should encourage use of shilling in purchasing goods within the country as some places like Mlimani city and other places like big hotels use dollar in their transaction. This also contribute to depreciation of shillings against dollar.
If our shilling appreciates, the price of export will raise while those of import will fall. As the demand for shilling raise its value will also appreciate.