The day the value of the Tanzanian Shilling dropped by 10%
On Friday evening, November 3rd 2017, at around 6.30 pm the exchange rate for the Tanzanian shilling in regards to other major currencies like USD and Euro dropped by more than 10% within minutes. Of course, exchange rates fluctuate and change all the time. A 10% drop however, especially within the same trading day, is highly unusual (have a look at the 5 year Tanzanian Shilling / US Dollar chart at the bottom of this article).
Local business men and bankers in Dar es Salaam started to panic, speculating about the possible reasons behind this exchange rate drop, since this potentially could bring a major economic crisis / recession to Tanzania.
When the Bank of Tanzania (BoT) noticed this incredible drop in the exchange rate, it communicated with financial service provider Bloomberg, who confirmed that there were so called ‘contributors’, who had entered incorrect data, noting that the firm had begun to correct the database. Eventually the Bank of Tanzania issued this press release and media outlets started reporting.
To this day it is not exactly clear how these so called ‘contributors’, presumably Wall Street traders using their Bloomberg Terminals, were able to manipulate the exchange rate in such an extraordinary fashion. Also, it remains are mystery if this was a genuine mistake or in fact a fast way to increase employee boni with insider trading.
If you have any additional information or knowledge about this incident, please contribute in the comments below. Asante na karibu Tanzania (Thank you and welcome to Tanzania).
© Photos / Screenshots: Bank of Tanzania, xe.com, Tanzania Experts