Tanzania is actively exploring the use of alternative currencies, such as the Indian rupee, Chinese yuan, and Russian rouble, that can be used in letters of credit (L/Cs) and other trade finance instruments.

The East African country wants to open up new opportunities in its international trade and reduce its reliance on the US dollar. This initiative aligns with a broader trend among BRICS and less developed nations to facilitate trade using national currencies.

Indian agreement

In March 2023, Tanzania and India agreed to conduct bilateral trade in their national currencies, eliminating the need for the US dollar in transactions between the two countries. This move is expected to enhance trade efficiency and strengthen economic ties.

Similarly, discussions between Tanzania and Russia have been underway to facilitate trade using their respective national currencies.

Discussions with Russia and China

According to Andrey Avetisyan, Russia's ambassador to Tanzania, banks from both nations are collaborating to implement this transition.

Avetisyan highlighted the potential for Tanzanians to utilise Indian rupees, Chinese yuan, and Russian roubles in trade, especially considering that India and China are among Tanzania's largest trading partners.

As well as mitigating the risks associated with US dollar fluctuations, this strategic shift aims to promote more balanced and direct trade relationships with key partners.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.