Introduction

The Tanzanian shilling (TZS) has experienced a notable recovery in 2025 after months of steep depreciation earlier in the year. Strategic government interventions, including a ban on the use of foreign currencies within the country, have played a crucial role in stabilizing the local currency. This rebound has strengthened the shilling against both the US dollar and the Kenyan shilling, reshaping Tanzania’s economic outlook.

Background of the Depreciation

In April 2025, the Tanzanian shilling had fallen to one of the weakest positions among African currencies, trading at TZS 2,668 per US dollar. This decline was driven by external pressures, including global inflation, increased import bills, and reduced foreign reserves. The depreciation had a direct impact on the cost of living and business operations, sparking concern among economists and policymakers.

Government Measures to Stabilize the Shilling

To counter the depreciation, the Tanzanian government implemented firm monetary policies and regulatory measures. Among the most decisive actions was the ban on the use of foreign currencies within its borders, compelling local transactions to be settled in Tanzanian shillings. This reduced reliance on the dollar, curbed speculative trading, and strengthened domestic demand for the TZS.

Recovery Against the US Dollar

By late August 2025, the TZS had regained significant ground, exchanging at TZS 2,470 per US dollar according to the Bank of Tanzania. The improvement of nearly 200 shillings per dollar marked a clear sign of confidence in the government’s corrective measures and the resilience of the Tanzanian economy.

Comparison with the Kenyan Shilling

The shilling also gained stability against the Kenyan shilling, East Africa’s strongest regional currency. Earlier in May and June, the TZS had weakened to trade above TZS 20.5 per one Kenyan shilling. However, by August 28, 2025, it recovered to TZS 19.09 per Kenyan shilling, reinforcing its stability in regional trade.

Economic Implications of the Strengthened Shilling

The appreciation of the Tanzanian shilling brings both opportunities and challenges. On one hand, the stronger currency eases import costs, lowers inflationary pressure, and stabilizes consumer prices, benefiting households and businesses reliant on imports. 

On the other hand, exporters face reduced competitiveness in international markets, as their goods become more expensive for foreign buyers. Economists caution that while stability is essential, balance must be maintained to protect export-driven sectors.

Conclusion

The rebound of the Tanzanian shilling in 2025 demonstrates the impact of firm government policy in restoring economic stability. By curbing foreign currency use and reinforcing compliance in the financial system, Tanzania has regained confidence in its local currency. 

However, the challenge remains in ensuring that exporters are not unduly disadvantaged, as long-term growth depends on both strong domestic stability and competitive international trade.