Macroeconomic Forecast Low Inflation To Hold Shilling Back

November 2007 | Macroeconomic Forecasts

We forecast the Tanzanian shilling to settle around TZS1,110/US$ by year end TZS1,080/US$ by the end of 2008. We believe the currency's major appreciation earlier this year was primarily due to the Bank of Tanzania's efforts to pull liquidity out of the market, which was in turn motivated by high inflation. Since we see inflation declining over the next two years to 4.0% and 3.9% in 2008 and 2009, the BOT should find little reason to tighten the money supply in the future, hence our forecast for a more mild appreciation going forward.

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