TANZANIA.
The Bank of Tanzania (BoT) has announced new regulatory guidelines for foreign exchange (FX) auctions that will come into effect in March 2025, designed to improve transparency, efficiency, and stability in the country's interbank foreign exchange market (IFEM).
The updated framework restricts auction participation exclusively to Tanzania's authorized foreign exchange dealing banks and specifies that all transactions will be conducted in US dollars against Tanzanian shillings, with exchange rate quotations rounded to two decimal places.
Under the new multi-price auction system, bids will be awarded at rates submitted by individual banks following a tiered allocation approach where the highest bid rates determine sales and the lowest bid rates determine purchases.
The BoT has established specific parameters to ensure market fairness, including a minimum bid size of $250,000 and a maximum cumulative volume cap of 20 percent of the total amount per bank.
To enhance market transparency, auction announcements will be published through the Refinitiv FX Platform with comprehensive details, while bidding will be conducted electronically with all bids being final and binding.
The central bank will publish auction results on its website and the Refinitiv platform on the same day, and has implemented strict compliance measures with penalties including suspension for banks that fail to adhere to the new procedures.
KENYA.
Kenya's Treasury was forced to pay Sh19.3 billion ($149.9 million) to eight commercial banks after Kenya Airways (KQ) defaulted on its loans, despite offering the lenders a 6.5-year bond as an alternative settlement option.
The banks, including Equity Bank, NCBA Bank, and Cooperative Bank, issued a default notice that threatened Kenya's sovereign credit rating, compelling the government to make an emergency cash payment on January 3 without parliamentary approval.
