Analysis of the Effects of Exchange Rate Movements on Fuel Price Changes in Tanzania, A case of Dar es salaam city

Khatib, Malick Mkilindi (2013) Analysis of the Effects of Exchange Rate Movements on Fuel Price Changes in Tanzania, A case of Dar es salaam city. Masters thesis, The Open University of Tanzania.

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Abstract

This study has attempted to establish the Effects of Exchange Rate Movements on Fuel Price Changes in Tanzania, the case of Dar es salaam city. The purpose of this research was to analyze the magnitude of the effects brought by exchange rate movements on fuel price changes in Tanzania, study the appropriate measure to avert or minimize the adverse impact taken by the government of Tanzania. Secondary data has been mostly used in this research. Primary data has been obtained through close ended and structured questionnaires supplemented by observation and face to face interviews. According to the findings, there is a direct relationship between the current trend of fuel price changes and the movements of exchange rate. The study also showed that there is an inappropriate association between the extent of fuel price changes and the movements of exchange rate, thus the appreciation or depreciation of foreign exchange does not tally with fuel price changes in the country. The study showed that fuel computation and periodic indicative price done by Ewura are wrongly applied and do not reflect the actual movements of exchange rate. The study revealed that foreign exchange appreciation or depreciation has immediate effect on fuel price changes because of weakness of local currency which causes Ewura as Government Regulatory Authority to use this weakness of TZS over USD to set and change the fuel prices every now and then.

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