Stable market keeps shilling sparkling

The shilling has traded almost flat against the US dollar in the first week of this month, amid quiet markets as demand was well matched by supply. 

Money traders expect a similar trend to continue to hold on in this week following an improvement of money in circulation, after four months of tight liquidity in the economy.

 “Today, a similar trend is expected with low to moderate level of volatility,” Standard Chartered Bank said in Friday’s daily market report which made available to the ‘Daily News.’ 

The shilling seems to comfortably fluctuate between 1,603/- and 1609/- a greenback — indicating this to be a new equilibrium range, at commercial banks markets. 

According to Bank of Tanzania (BoT) Interbank Foreign Exchange Market (IFEM) summary, on average, the shilling trades between 1,587/- and 1,590/- range since the beginning of this month.  In fact, the shilling had been fluctuating between 1,587/- and 1,591/- a dollar since January, the BoT report shows.  

As a result of the exchange rate stability, the interest rates have started to climb down with interbank cash market recording down trend on the overnight and Repurchase agreements (Repos). 

The overnight rates decreased to 1 and 10 per cent levels respectively, while the Repo rates have shown significant drop at between 3 and 5 per cent for one week and two weeks respectively.  In last Wednesday's Treasury Bill auction, on average, the 364 billion yield rate dipped to 15.30 from 18.44 per cent of the previous market, and 182 billion rate dropped to 16.21  from 17.70 per cent. 

The 35 billion and 91 billion yield rate went down slightly from 10.67 and 13.67 to 7.73  and 13.18 per cent respectively. 

Since the beginning of the year, the market has seen improved performances on trading of government securities compared to the preceding period when the Treasury Bills performed poorly. 

In the previous Treasury Bills auction, bidders offered a total of 169bn/- against the 100bn/- floated, but the central bank accepted only 95.5bn/- as successful bids. Late last December the auction attracted only 71bn/-. 
Source: tzexchange.blogspot.com  
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