DOLLAR depreciation that is now being experienced arose from moves by the central bank to stop all transactions in the US currency for purchases conducted locally, the governor has declared.

BoT Governor Emmanuel Tutuba made the remarks yesterday at the State House, Zanzibar, during a meeting with President Dr Hussein Ali Mwinyi, who commended the depreciation of the dollar in the local market.

A lower value for the dollar is a significant relief for the economy as it will help reduce the cost of living when goods cost lower in comparison with the dollar rate earlier, he said.

The governor said that ending transactions in the US currency was intended to strengthen the local currency “and return it to the market, as the Tanzanian shilling had been weakening for some time.” 

He warned traders that it is illegal to buy or sell goods using the dollar or any foreign currency, affirming that such practices undermine the value of the local currency while artificially inflating the value of foreign currencies.

This is illegal under the country’s economic policies and market regulations, he stated, asking hotel operators and the tourism industry as a whole to encourage their customers to make payments using the local currency. 

He also recommended setting up foreign exchange facilities in key tourism spots to enable tourists to continue using the local currency.

The governor aired hopes that prices of goods would decline with dollar depreciation, appealing to state authorities to “intervene to help ease the burden of high living costs for citizens.”

In his remarks, the president similarly expressed the hope that the decline in the dollar value would contribute to lowering the costs of essential goods like food and fuel. 

Prices of goods affected by the global rise in the dollar value need to return to more reasonable levels, he said, noting that rising dollar costs in importing goods had affected the country’s economy.

Even then some domestically produced goods had helped offset losses in purchasing power particularly during the harvesting season, he said, pointing at food products, including rice.

Locally produced goods had reduced the need for imports, he said, commending the BoT for its professionalism in the move to encourage holders of old banknotes withdrawn from circulation to exchange them for new banknotes at commercial bank windows or BoT offices.