Foreign currency deposits in Tanzania maintained their upward trajectory by the end of June 2025, reaching USD 5.287 billion, up from USD 5.04 billion recorded in May 2025. The USD 5 billion mark was first reached in March 2025, reflecting a continued appetite for holding foreign currency amid shilling depreciation and a seasonal challenge of dollar shortages.
The increase comes as the latest monetary policy statement from the Bank of Tanzania (BoT) expressed optimism about a gradual easing of the economy’s dollarization.
“The ratio of foreign currency deposits to total deposits, a key indicator of financial dollarization, decreased marginally to 30 percent in May 2025 from 30.7 percent in March 2025, while the share of foreign currency deposits in broad money (M3) remained stable at 25.4 percent,” the Bank’s statement reads.
The Bank attributed the decline in dollarization partly to improved foreign exchange liquidity and ongoing public awareness campaigns regarding Section 26 of the Bank of Tanzania Act, which prohibits the use of foreign currency in domestic transactions.
The BoT has intensified its awareness efforts through media campaigns on the regulation limiting foreign currency use. However, following concerns raised by the tourism sector, the Bank allowed non-residents to continue using foreign currencies for tourism-related transactions.
