Assessing the Impact of Exchange Rate Fluctuations on the Revaluation of Foreign Currency in Tanzania

Maembe, Glory (2015) Assessing the Impact of Exchange Rate Fluctuations on the Revaluation of Foreign Currency in Tanzania. Masters thesis, The Open University Of Tanzania.

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Abstract

There are inadequate studies in Tanzania regarding the impact of exchange rate fluctuation on the revaluation of foreign currencies in Tanzania. This study was conducted for assessing the impact of exchange rate fluctuation on the revaluation of foreign currencies and its associated impact on the purchase of goods and services in United States Dollar (USD), European Union Currency (EUR) and Great Britain Pound (GBP) foreign currencies. In this study, data was collected using interviews, questionnaires and documentary reviews. The sample size for the study involved three (3) respondents from the Bank of Tanzania and was established through judgment as the population for the study was not homogeneous. The collected data were analyzed using descriptive statistics methods through calculation of average exchange rates for each year and revaluations of foreign currency. From the study it was realized that the fluctuation of exchange rates has an impact on the revaluation of USD, EUR and GBP foreign currencies. The impact is indicated by the study findings which showed that all the revaluations obtained were negative which implied that as time goes business people in Tanzania require more local money in order to get the equivalent USD, EUR and GBP currencies to buy the required goods and services. It is hence, recommended that the Government under the guidance of the Bank of Tanzania put in place appropriate policies and guidelines for managing risks resulting from fluctuation of exchange rates.

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