Shillings seen firmer

The shilling is expected to gain against the dollar, lifted by a local currency liquidity squeeze and a slowdown in demand for the greenback.

Commercial banks quoted the shilling at 1,580/1,587 to the dollar on Thursday, from 1,578/1,583 a week ago.

"Next week, we anticipate that the shilling will continue to appreciate by 2 or 3 shillings," said Sameer Remtulla, a trader at Commercial Bank of Africa Tanzania. 

"The reason for the appreciation is that the shilling is very tight and players have been offloading dollars to get the local currency.

"There is a little bit of demand for dollars from oil companies, but most people are struggling for shillings at the moment."

Traders said the local currency will likely trade in the 1,570-1,580 range in the days ahead.

"I think the shilling might continue to strengthen because we are heading towards the end of the month and some customers will be aggressively selling dollars to get shillings," said Barton Hamisi, a trader at National Bank of Commerce, a unit of South Africa's ABSA.

"There is not much activity in the market and we don't see any fundamentals to significantly move the market. The central bank is very keen to see the shilling trading at current levels."

The Bank of Tanzania said on its website it traded US$29.8 million on the interbank forex market in the last week.
Source: Reuters,
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