Agro-business keeps shilling sparkling

The shilling gained some little ground  against the US dollar, thanks to improved exports revenues from the agricultural sector.

The commercial banks quoted the shilling closing Thursday’s trading at around 1568/1578, which is a range bound the local currency has been holding on firmly since January.

Standard Chartered Bank said  that the positive trend on the shilling is a result of reliable dollar supply in the market from the agricultural sector.

“Today (yesterday) we expect to see a slight gain by the shilling and volatility is expected to remain low to medium,” the bank said.
 
Barclays Bank Tanzania said in a daily statement that the market was relatively muted with little activity from both corporate customers and inter-banks.

The shilling has been trading at a steady range for the last nine months, signifying that the monetary policy to reverse the free fall of the local currency about a year has paid off.
 
According to the Bank of Tanzania (BoT), the shilling opened trading at 1,555/85 in January and maintained the stability to close yesterday’s trading at 1,576/23 per dollar.

“The exchange rate remained relatively stable at around 1,583/79 per US dollar,” BoT said in the monthly economic review for August. The central bank said recently that shilling trading range has improved compared to last September whereby a dollar was selling at 1,825/-while volatility at the minimal level.

BoT has been insisting that the local currency volatility was influenced heavily on the global financial crisis between 2008 and 2010 which also hit the world major currencies.
 
The monthly economic review shows that traditional exports increased by 13.4 per cent to 774.6 million US dollars in July, this year compared to the level of exports on the corresponding period in 2011.

“This development was mainly attributed to an increase in both export volumes and prices of cotton, tea, cloves and cashew nuts,” the review indicates.
 
It added: “The improvement in export volumes was a result of increased production following favourable weather conditions.”

Despite the good performance of traditional exports, the value of coffee exports went down by 9.7 per cent to 145.1 million US dollars. This follows a decrease in export volume partly attributed to the cyclical nature in coffee production.
Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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