The shilling is expected to continue firming up against US dollar
backed by exports mainly cotton and tobacco.
Experts have it that the shilling gains started at the beginning of
this year and maintain the rate of 1,600/- per the greenback. It is likely gain
further to 1,550/- levels.
Standard Chartered Bank said in its daily market report that the
shilling positive reception was backed by matched flows in the interbank as
well as corporate markets.
"As we head towards end of second quarter and the start of
harvesting for both tobacco and cotton, we expect the shilling to continue its
gradual appreciation against the US dollar," the bank said.
According to Bank of Tanzania (BoT) the shilling opened the year
trading at 1,581/84 against a dollar and only to fall to 1,600/- in February
when it reached 1,605/-.
The BoT April's Monthly Economic Review shows value of export of goods
and services was 7.02 billion US dollars compared to 6.24 billion US dollars
recorded during the year ended April last year.
"Traditional exports declined 3.6 per cent to 678 million US
dollars mainly due to a decline in export volumes of coffee and cashew nut as
well as export unit price of tobacco," BoT report issued in May shows.
But while the bank predicted strengthening of the shilling on the back
of cotton sector, a price war is looming after farmers started opposing this
year's indicative price of 450/- per kilogramme.
Members of Parliament from
cotton growing in Lake Zone have said categorically that they will not settle for
any price except of 1,000/- per kg in this season that starts next month.
Cotton production in Tanzania, East Africa's biggest producer, may
climb in 2012-13 for a second successive season after the country introduced
contract farming and on improved weather, the Cotton Board of Tanzania (CBT)
said.
According to CBT cotton production in 2011-12 is estimated to be 38 per
cent more than last season's crop of 163,000 tonnes due to favourable weather
conditions and implementation of contract farming.
Tanzania exports at least 70 per
cent of its annual crop mainly to the UK, Switzerland, Belgium,
Malaysia, Singapore, the United Arab Emirates, China and Kenya, according to
the board. The nation plans to boost domestic consumption of the crop to 51 per
cent in three years, according to CBT website.
Source: The Daily News,http://dailynews.co.tz, reported by Abduel Elinaza
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