Tanzania shilling remains stable

Importers saved the shilling after refusing to buy the US dollar above 1,581/- to 1,595/- ranges on Wednesday, causing the exchange to cool slightly, according to National Microfinance Bank (NMB).

NMB's e-Market report said after many players remained reluctant to purchase the greenback at the said level, the commercial banks quoted the shilling close the day at 1,580/ to 1,594/- range.

"The shilling got relief from importers' low demand, as many players were reluctant to purchase the greenback above the (said) level," the bank said.

NMB further said, "going into next week, we could see the shilling strengthen on the back of dwindling demand and month-end dollar inflows." 

Barclays Bank daily market report showed that Tuesday's session registered "another largely inactive market, with most corporate buyers of the greenback shying away from the current levels of above 1,590/-".

Standard Chartered Bank said that the shilling traded relatively flat against the greenback as the market saw a well matched trading on both the interbank and corporate market. 

"Low level of volatility is to be expected," StanChart said.

In other development, the International Monetary Fund (IMF) said the Bank of Tanzania (BoT) will maintain its floating exchange rate regime with intervention limited to short-term smoothing operations."Monetary policy will remain tight to reduce core inflation," IMF said in country report issued on Thursday.

The BoT, according to IMF, expects that, with a return to more normal harvests, headline inflation will drop in the coming months, easing price expectations.

"Disinflation is being reinforced by holding base money below its programmed path, which has helped slow credit and liquidity growth," IMF said. June inflation stands at 18.2 per cent.

The Breton Woods institution said given Tanzania's shallow financial system, the transmission of monetary policy to inflation is projected to be relatively slow, with core inflation declining only to 7-8 per cent range by end-2012.

Meanwhile, the interbank money market, overnight rates ranged from a low of 1.0 per cent and high of 6.75 per cent, with a weighted average rate of 4.48 per cent.
Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza
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