Impact of Exchange Rates on Foreign Direct Investment in Tanzania

This study examines the impact of the exchange rate on Foreign Direct Investment (FDI) in Tanzania. The secondary time series data was obtained from World Bank, World Development Indicators (WDI) and from the Central Bank of Tanzania for the period 1995 – 2017. Using correlation and regression analyses, the findings reveal that there is strong positive relationship between real exchange rates and FDI inflows in Tanzania. Moreover, the findings reveal that the depreciation of Tanzanian Shillings attracts FDI to the country. In addition, inflation, capital formation, GDP and the interest rate are significant determinants of FDI in Tanzania. Keywords: Real Exchange Rate, Foreign Direct Investment, Economy of Tanzania.