Shilling solidifies stance against US dollar


The shilling has firmed against the dollar helped by slowed commercial demand for the greenback as corporate firms consolidates their end-month tax obligations.

The shilling end-week slightly appreciation was on the back of current monetary policy stance. The market closed at 1592/1597 levels, a 2/- gain from Thursday's close of 1594/1599 levels, according to National Microfinance Bank (NMB).

"The last trading session of the week left the local currency edging high against the US dollar on reduced demand for the greenback from corporate as we approach month end tax payments," NMB said on its e-market daily report.

Standard Chartered Bank said the market experienced a quiet trading on Friday to enable the shilling show some slight gains.

"As the corporate focus gradually shifts from dollar demand to shilling demand for end of month Tax payments, the shilling is expected to hold on to the gains of yesterday," Standard Chartered said.

The shilling gain is also associated with the cash interbank money market which witnessed continued easing of liquidity with overnight rates at record low. 

Last Thursday, interbank rates eased slightly indicating increase in liquidity which has seen the volume traded going down to 19.7bn/- from 25.2bn/-.

"We expect the interbank to remain below the 10 per cent levels as we move towards the end of month," the bank said.

The Repo window remained at four per cent for the two week, with only 5bn/- offered and accepted. Since the beginning of this year the shilling has been wobbling at between 1,580/- and 1,600/- level, the new benchmark, according to analysts.
Source: tzexchange.blogspot.com
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