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| BoT HQ in DSM |
However, Barclays
Bank e-newsletter says that the end of month corporate requirements is expected
to bring more participants in the market.
Most corporate firms' demand for local currency normally surges on month
end basically for paying salary and tax obligations.
“The shilling closed the week last Friday with bullish
performance, recovering ground against the US dollar during the period under
review but bracing with expectations of a build up bias for stronger currency
as month end approaches,” stated the bank report.
High demand for US dollars by importers last week weakened
the local currency, pushing it to an average of 1,600/-.
However, Standard Chartered Bank said in its
Daily Market Commentary that the Central
Bank (BoT) presence in the market calmed nerves and gave strength to the
shilling towards end of the week.
“The shilling, thus gained the strength during closing of
business when it bounced at 1593/1598 levels,” said the bank report. On the other hand, NMB e-markets reported the
weakened shilling towards market closure on Monday as importers took advantage
to buy dollars cheaply despite the day
starting off with range-bound against
the greenback.
The report indicated that closing of business on Monday saw
the shilling pegged at between 1,583/- and 1, 598/-.
According to the Tanzania Securities Limited
(TSL) weekly market commentary, the BoT strategy to shore up the shilling value
seems to be working as the local currency has been gaining ground against major
currencies in the past few weeks.
The BoT close eye on shilling performance is aimed at
striking a balance between exports, imports and other sectors like tourism
which has played a key role on the economy.
But analysts hold that tightening liquidity will only help saving the
local currency while giving hope to importers.
Shilling stabilisation could persuade money mongers to shift
their investments on debt instruments like Treasury Bonds and Treasury Bills as
well as overnight borrowing and repurchase agreements (Repos).
The interbank borrowing rates have been declining for the
past few weeks, reflecting the current money market environment in the
country. However, the overnight rate
towards the end of the week was slightly higher at 15.73 per cent compared to
15.71 per cent of the previous period.
Source: The Daily News
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