Currency crises: Are we heading the Russian way?

[Ndalama]

You speak about the speed of depreciation,have you done any analysis on other major currencies, how about Malawi and Zambia? Donor withholding has never been a factor, We have enough reserves and even recently we got ENCB from china 300 USD, so donor fund is not a big deal

So you are happy if your neighboring states also performs badly on currency value?

 

[Kimweri]

Kina kimweri tuliyaona haya mapema, mlipokubali yule bibi bozo kuwa waziri wa fedha mlikubali kujichimbia kaburi lenu. sasa wakati wa maziko msigome kuingia humo.

Huwezi kuwa na waziri wa fedha mwenye uelewa mduchu kama yule halafu ukategemea mambo yaende sawa.yani yule hata ku-translate minutes za vikao vya WB,BOT kwenda kwenye executive ni issue.mbaya zaidi raisi wake mchumi wa GPA ya 2.1,what do you expect?na bado.

kuna sehemu hazitakiwi kukaa wanasiasa, unless mna mpango wakula nyasi.

 

[erique]

So you are happy if your neighboring states also performs badly on currency value?

My point is, the USD is appreciating against many currencies, not only african currencies but even other major currencies like YEN, EURO and GBP. The speed of depreciation is ofcoz highier for african currencies relative to those major ones, and that normal given the structure of our economies.

If everything is okay and your neigbour is depreciating, you become uncompetative interms of trade and you lose comperatively. Depreciation is not always a bad thing.

 

[Ndalama]

My point is, the USD is appreciating against many currencies, not only african currencies but even other major currencies like YEN, EURO and GBP. The speed of depreciation is ofcoz highier for african currencies relative to those major ones, and that normal given the structure of our economies.

If everything is okay and your neigbour is depreciating, you become uncompetative interms of trade and you lose comperatively. Depreciation is not always a bad thing.

ENRIQUE thank you for your good response on my enqury, please help me understand this; you have mentioned of Malawi, as we might be knowing Malawi's economy is very weak compared to our Tanzania's but why their Kwacha in general is stronger than our Shilling? Of recent 1Mwk = 3.5Tsh

 

[Ngoksi]

Sure, Tz is a net importer of gold, tanzanite, cotton, sisal, cashewnut, fish, etc.....etc.....etc....net importer yes net importer as you have said....over.

first understand the meaning of importation then comment...

 

[erique]

ENRIQUE thank you for your good response on my enqury, please help me understand this; you have mentioned of Malawi, as we might be knowing Malawi's economy is very weak compared to our Tanzania's but why their Kwacha in general is stronger than our Shilling? Of recent 1Mwk = 3.5Tsh

We are discussing the depreciation of our currencies against the USD.

 

[Ndalama]

We are discussing the depreciation of our currencies against the USD.

Don't get me wrong ENRIQUE JF is where one broadens her/his knowledge, let me rephrase the question without mentioning any country; what do you think attributes to a currency depreciation? And what in your opinion think if done by responsible entities can arrest the situation?

 

[stwita]

If this rate of depreciation of the TSH does not serve as a wake up call to our economists, then this country is seriously doomed

 

[erique]

Don't get me wrong ENRIQUE JF is where one broadens her/his knowledge, let me rephrase the question without mentioning any country; what do you think attributes to a currency depreciation? And what in your opinion think if done by responsible entities can arrest the situation?

Depreciation can be due to many reasons, but mainly speculative actions and structure of the economy. In TZ, the issue has been always due to demand and availability of the USD. We may not want to make our Shilling very much strong because it has severe implications on our exports, and we need our exports to go up. What we need is to have a stable Shilling, we dont want too much volatility. And for that we just need to work on the supply side, we increase exports and somehow reduce the unnecessary use of USD in the economy.This will increase availavility of USD in TZ and stabilize the Shilling.

 

[Ndachuwa]

What are policy makers (Government and BoT) doing to make our shilling stable?

1. "If a factor increases the demand for domestic goods relatively to foreign goods, the domestic currency will appreciate; if a factor decreases the relative demand for domestic goods, the domestic currency will depreciate". Is there any positive initiative being done such as AGOA and like? What Ministry of Trade doing to address this?

2. "In the long run, a rise in a Country's price level (relatively to the foreign price level) causes its currency to depreciate, and a fall in the country's relative price level causes its currency to appreciate". What is government doing to reduce rocketing of food prices?

3. "Increasing trade barriers causes a country's currency to appreciate in the long run" Do we really need to continue importing sub-standard goods from china such as plastic shoes, artificial flowers, low quality electrical goods? What is the role of Ministry of Industry and SIDO in supporting small scale industries such as for shoes?

4. "Increased demand for a country's exports causes its currency to appreciate in the long run; conversely, increased demand of imports causes the domestic currency to depreciate".When our leaders will show the way for example wearing suits made from Sungflag produce? Or Stocking their refirgerators with Dodoma wine instead of South Africa wine?

5."In the long run, as the country becomes more productive relative to other countries, its currency appreciates". Has anybody linked the depreciation of our shilling to the effect of factories closed after being privatised?

Source:Mishkin & Eakins, 7e

 

[Fx Trader]

Depreciation can be due to many reasons, but mainly speculative actions and structure of the economy. In TZ, the issue has been always due to demand and availability of the USD. We may not want to make our Shilling very much strong because it has severe implications on our exports, and we need our exports to go up. What we need is to have a stable Shilling, we dont want too much volatility. And for that we just need to work on the supply side, we increase exports and somehow reduce the unnecessary use of USD in the economy.This will increase availavility of USD in TZ and stabilize the Shilling.

In the medium to long run we need to export value added products and also reduce our dependency on fuel generated power (one the main reasons for the widening of the current account deficit).

In the short term, the BoT has restore not only it credibility but the trust in the local unit by intervening and using other measures (if its speculation).

 

[Fx Trader]

tzs depreciate to a 4 year low of 1845! Godless Bless Tz!

 

[Sentry]

something else, this is partly why tanzania will take longer to catch kenya in nominal gdp rankings. ghana who in 2013 had the same nominal gdp as ethiopia, tunisia and kenya have now even fallen behind tanzania due to falling currency.

 

[Fx Trader]

its extremely sad that our leaders are least concerned about our welfare. We will not fully benefit from falling global oil prices. very very sad.