DAR ES SALAAM: THE Bank of Tanzania (BoT) has slightly reduced its most liquid reserves while increasing its gold holdings, signalling a strategic shift in the management of the country’s foreign assets amid global economic uncertainties.

The central bank’s cash and cash equivalents stood at 3.99tri/- in May, down marginally from 4.03tri/- at the end of April, while its bullion gold holdings increased by 12.65 per cent to 5.84tri/-, according to the latest statement of financial position.

The figures were disclosed in the central bank’s statement of financial position published in accordance with the BoT Act and signed by Governor Emmanuel Tutuba.

Economist and investment banker Dr Hildebrand Shayo said the movement reflected a tactical rebalancing of reserves, with the central bank reducing some liquid assets while strengthening its gold holdings.

“This shift from foreign currency assets into physical gold reflects a broader trend among emerging-market central banks seeking to diversify their reserves and protect against global economic shocks,” Dr Shayo told the ‘Daily News’ yesterday.

The statement shows that while the BoT reduced its holdings of foreign currency marketable securities by 4.55 per cent to 6.89tri/-, its bullion gold reserves rose from 5.18tri/- in April to 5.84tri/- in May.

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Dr Shayo said maintaining adequate liquid reserves remained critical for supporting monetary stability and responding to sudden market pressures.

“The 3.99tri/- cash balance provides the central bank with immediate liquidity that can be deployed when needed, including managing pressure on the Tanzanian shilling,” he said.

He added that the liquid reserves also support the country’s ability to meet short-term external obligations, including payments for essential imports such as fuel, industrial equipment and infrastructure-related goods.

The decline in cash and cash equivalents also coincided with a reduction in deposits held at the BoT by commercial banks and non-bank financial institutions, which fell to 6.11tri/- from 6.37tri/-.

Dr Shayo said the decline suggested that financial institutions were drawing down deposits to support increased lending and other economic activities, requiring the central bank to continue closely managing liquidity conditions.

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The post Central bank swaps liquid assets for gold safety buffer appeared first on Daily News.