A strong national currency is not necessarily healthy for the economy since it makes exports expensive and increases price of goods and services, Bank of Tanzania (BoT) governor Prof Benno Ndulu has said.

Speaking during a meeting in Dar es Salaam yesterday on how to manage the exchange rate fluctuation risks and its impact on business and investment in the country, he said time has come to end the wrong notion and focus on improving export trade.

He told a breakfast meeting hosted by the Tanzania Private Sector Foundation (TPSF) that China's export strength and global trading leadership is based on its weaker currency, the yuan.

He challenged TPSF members to improve production for export to help put in check depreciation of the shilling.

"We ought to improve production of commodities for export. This will play a crucial role in stabilizing the local currency," said BoT chief.

Prof Ndulu said factors causing the depreciation of the shilling are high inflation rate compared to trading partners, the seasonability supply of foreign exchange earnings as well as speculation and movement of major global currencies.

While maintaining that the central bank was unlikely to intervene to bail out the ailing shilling, Prof Ndulu said BoT boasts of foreign reserves of $3.5 billion.

"We have adequate capacity to intervene but doing so would discourage competition. We let the market do its work. At the moment, BoT releases through the inter-bank foreign exchange market between $80 and $100 million per month," he said.

The central bank would however intervene if the depreciation goes beyond a set range, according to the governor.

He was optimistic that the shilling would stabilize in the near future owing to foreign exchange earnings from the tourism sector and agriculture exports during the second and third quarter of the year.

"This is a peak season for tourists and harvesting season, we thus expects improvement in supply of foreign exchange. It is also during this period that development partners dish out aid. This means there will be enough foreign exchange in the money market," Prof Ndulu explained.

Among measures that BoT has put in place to address volatility of the shilling against major global currencies, was strengthening of the former by checking on increased inflation.

TPSF chairperson Easter Mkwizu, said the private sector was working to improve productivity for export, but it was being held back by uncontrolled imports into the country.

"We need to check on unnecessary imports in a bid to support local production," remarked Ms Mkwizu.

She noted that the private sector was eager for the stabilization of the local currency to ensure smooth running of businesses.

The Tanzania Exporters Association (TANEXA) executive director, Mr Mtemi Naluyaga, was concerned that the some few dishonest traders import junk products which end up being destroyed by the authorities and thus make the country lose the hard-earned foreign exchange.

"When goods are burnt it means money destroyed," said the business executive.

Mr Naluyaga challenged the private sector to improve production in a bid to guarantee forex earnings throughout the year and do away with seasonality supply.

"Our currency is loosing ground against major currencies...We need to come out and admit our weakness and address the volatility," Mr Naluyaga said.

Artumas Tanzania managing director Salvator Ntomola wondered why it was very easy to acquire foreign currency in Tanzania.

"I am not complaining, but I am concerned on the ease of getting foreign currency in Tanzania. It seems every Tom, Dick and Harry can acquire foreign currency without following any procedures," Mr Ntomola observed.

Tourism, gold and manufacturing were the top foreign exchange earners last year, according to Prof Ndulu. Tourism earned the country $1.3 billion followed by gold exports at $1.2 billion while the manufacturing sector exported goods worth $600 million.