The Effect of Currency Fluctuation Towards Income of Induviduals

Only available on StudyMode
  • Topic: Cent, Tanzanian shilling, Tanzania
  • Pages : 12 (2634 words )
  • Download(s) : 10
  • Published : January 20, 2013
Open Document
Text Preview
Contents

Chapter 1
Pages:

1.0 Introduction…………………………………………………………….1

1.1 Background…………………………………………………………….2

1.2 Statement of the study…….………………………………………........2-4

1.3 Objective of the study..................................................................…........4

1.4 Research questions……………………………………………...…...5-11

1.5 Research hypothesis………………………….……………………........12

1.6 Significance of the research……………….……………………………12

Chapter 2

2.0 Literature review………………………………………………..……….13

Chapter 3

3.0 Research design………………………………………………………..17

3.1 Study population……………………………………………………….17

3.2 Scope of the study……………………...………………………………17

3.3 Sample and sampling techniques……….………………………………17

3.4 Methods of data collection……………………………………………...18

3.5 Methods of data analysis………………………………………………..18

3.6 Time schedule…………...………………………………………………19

3.7 Financial budget………...……………………………………………….20

3.8 Bibliography…………..…………………………………………………21

Chapter 1
1.0 Introduction.
The value of money depends upon price level of commodities. When the price level rises, the value of money decreases and this may also be opposite. The changes in the value of money can affect different sections of the community. For instant, when the price level goes up, businessmen, industrialists and peasants gain, but fixed income earners and consumers lose, the opposite of this is also true (Saleemi, 1987).

When prices rise, production of commodities increases, employment level rise, but on the other hand income distribution in the case of those who earn high, those who earn low as well as those who earn nothing is completely unfair. In addition, when price has a falling trend, the level of production decreases but fixed income earners gain.

According to Saleemi (1987) economically, the rapid rise in price level is known as inflation, whereas the rapid decrease is deflation. Too much fluctuation of the price level of commodities either inflation or deflation has a great effect in economic stability of a country. Tanzania being our case study seems to lose the stability of her currency day after day due to inflation effects. 1. Background

If we look at the trend of fluctuation of Tanzanian Shilling (TShs), we may note that in recent years it has been dropping time after time. According to Ali (2006) during the second term of leadership in Tanzania, the shilling fell from 43.7 percent while during the time of third government of the, the shilling fell further to 96.4 percent.

In reality, the situation of currency fluctuation threaten the economic growth of Tanzania to that extent that even the increase in tax collection which was realized can not be reflected to the low income earners (walalahoi). For those with fixed income, currency fluctuation may affect them positively or negatively depending on the fluctuation of the currency.

Furthermore, Ali (2006) informs that in Zimbabwe, the currency felt from an exchange rate of 23.7 in 1998 to 6,200 Zimbabwean dollar in 2005 per 1 USD, this reflects 1000 percent inflation. On the other hand in Kenya, despite of political instability, the exchange rate of Kenyan shilling has raised from 76.2 Shs in year 2000 to Kshs 72.5 per 1 USD in year 2006.

2. Statement of the study
The fluctuation of currency in Tanzania can be reflected far back to post Tanzanian Uganda war against fugitive invader Iddi Amin Dada. Before the war, the Tanzanian currency was strong having better exchange per USD (Dr Mshana’s personal communication). However, in recent years the fluctuation of Tanzanian shilling was realized during the second term of political governance, whereby the shilling fell from 43.7 percent while in the third term of leadership, the shilling further to 96.4...
tracking img