The shilling has depreciated to the
lowest level since January after crossing the 1,600/- mark against the
US dollar last week, due to high demand by the industrial and service
sectors.
Since the beginning of this year the
shilling has been trading at between 1,550/- and 1,590/- for the
greenback.
Money market analysts, however, said
the trend is short- term and expected to return to normal in the near
future, particularly once fuel shortage stabilises.
At presenmt oil importers increase the
demand for US dollars. The National Microfinance Bank (NMB) said that
the shilling further depreciation was pushed by demand from importers at
interbank market.
“(The) demand from interbank, industrial, and service
sectors still push up the value of the dollar in the market”, the bank
said on its e-market report.
This was also seconded by Tanzania
Securities Chief Executive Officer, Mr Moremi Marwa, who said major
reason that made the shilling lose ground is increased demand by
importers.
“There are a number of reasons, but is
has mainly been pushed up by oil importers demand for the (US) dollars
to cater for the current fuel instability at the market,” Mr Marwa told
the ‘Daily News’.
The CEO said hedging against further
depreciation following market speculation could also be the reason for
losing the ground further. Most people like to keep their money in
dollars to avoid the effects of the shilling’s declining value.
He ruled
out the surge in demand for the local currency because the approaching
Christmas festival as trade in gifts and other consumer goods is high.
The Standard Chartered Bank said the
shilling ended the month on the high as the dollar continued its recent
surge against the local currency. “We expect the dollar to at least
maintain its current high levels with medium to low volatility,” the
bank said.
However, the shilling strengthened on
Friday to close at 1,587/1,602, as importers avoided buying the
greenback at the recent highs.
“This downward correction of the pair is
likely to continue into next (this) week, especially if it is well
supported by continued US dollar inflows from agriculture, NGOs, and
tourism,” NMB bank said at its Friday’s e-Market report.
Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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