The inflows of US dollars from donors and disbursements of quarter end obligations have strengthened the shilling that appreciated to 1,627/1,637 on Tuesday from the previous 1630/1,640.According to CRDB Financial Market highlight, the local shilling continues to appreciate against the greenback, thanks to increased inflows of US Dollars from donor funding to support the economy and decreasing demand for the hard currency.
The local currency experienced slight volatility last week as importers continued to impose pressure in the market.“Further shilling strength is likely as these market conditions are expected to intensify in two days to come,” National Microfinance Bank (NMB) said its e-market report yesterday.
The report stated that the local currency strengthened significantly during yesterday trading session as Non-governmental organisations (NGOs) and other corporate firms demanded dollars to pay quarter‐end obligations and banks queued to offload their USD positions.
Despite the insufficient supply of dollars from agricultural sector that accounts for substantial part of the country’s exports, demand for the shilling to meet end of month obligations have led to the market stability.
According to Standard Chartered Bank daily market commentary, the dollar supply was mainly from mining sector.
The bank’s report stated that most importers and manufacturers held their shilling position for tax payment and other monthly obligations, the situation that significantly helped in reducing pressure on the shilling.
In the international markets, the US dollar rallied on Tuesday to its highest in nearly three weeks against a basket of currencies on rising expectations that US monetary stimulus will be scaled back in the near term.
Source: The Daily News, reported from Dar es Salaam
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