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| BoT HQ in Dar |
The Bank of Tanzania (BoT) has said the current exchange rate level has
affected the real balance which allows for smooth flow of exports and imports.
This was said in Dar es Salaam on Wednesday by the BoT Director of Economic Research and Policy,
Dr Joe Massawe while commenting on the current exchange rate which ranges
between 1,570/- and 1,590/-and how it supports the country's exports and
imports.
"Despite pressure on the shilling due to trade deficit, the central bank has successfully managed to
contain the exchange rate fluctuations which went up to nearly 2,000/- per US
dollar early this year," remarked Dr Massawe.
Due to disparity between
exports and imports, Dr Massawe said that devaluation of the shilling is done
carefully within the lines of the market forces without favouring either side.
"Industrialised countries like China have devalued their currency
due to their large export base", he said. He added that the bank will
continue keeping a close eye on the local currency performance to ensure its
value is maintained as well as facilitating exports and imports.
Similarly, Dr Massawe said the bank is keen in observing that business
ethics on exports and imports are tightly observed. For example, he said it is illegal for
exporters to own an offshore account without seeking permission from the
central bank. He said the move aims to protect the local currency from
volatility.
A 2011 report on the East African economies by Delloitte & Touche shows that there has
been a relentless depreciation of the local currency over the past four years
mainly due to unfavourable balance of trade.
The BoT monthly economic review
for May this year indicates that the value of exports of goods and services was
7,015.5 million US dollars (about 11.22tri/-) compared to 6,240.2 million US
dollars (9.98tri/-) of the previous period on account of the improvement in
gold exports and travel receipts.
Also, the value of imports of goods and services hit 12,825.7 million
US dollars (about 20.52tri/-), an increase of 36.4 per cent compared to the
level recorded in the corresponding period in 2011, largely due to the surging
value of oil imports.
Commenting on the current shilling position, the Dhow
Financial Limited Chief Executive Officer, Prof Mohamed Warsame, said that
there is need for an increased investments on export-based products which will
enhance foreign earnings.
"Currently, the unfavourable balance of payments signifies that
the country imports more than exports. As a result we can not devalue the
shilling more due to the narrow exports," he said.
On his part, Dr Honest
Ngowi from Mzumbe University raised alarm over the level of imports, saying that
the negative trend will continue to hurt the economy.
Source: The Daily News,http://www.dailynews.co.tz, reported by Sebastian Mrindoko
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