BoT rescues shilling from sliding further

The shilling maintained a flat trading as demand was matched off by the supply in the market, thanks to the central bank intervention to salvage the local currency.

Standard Chartered Bank said the shilling remained flat after the Bank of Tanzania (BoT) supplied dollars to the oil sector to cool off soaring demand of the greenback.

“This has also been attributed by the central bank intervening and supplying dollars to the oil sector,” Standard Chartered said on its daily report last Friday.

“We expect low and medium volatility during today’s trading.” The bank quoted the shilling trades at 1,627/- against the dollar at the close of the week. National Microfinance Bank (NMB) said the pair, shilling and US dollar, closed “trading week within tight range” to close the week at 1,614/1,627 on Friday.

“The shilling is expected to strengthen next week, although sudden importer demand could pose downward risk the local currency,” NMB said in its e-Market report.

The bank attributed the tight range trading throughout the week to greenback inflows from agricultural proceeds matched the strong oil and manufacturing sector demand.

Tanzania Securities Business Analyst, Brenda Rose Massay, said the shilling was expected to strengthen against the dollar during the coming week.

“(The appreciation is) due to local currency requirements to meet some month end obligations,” Ms Massay said in the firm weekly statement.

Another bank, CRDB, said traders believe the shilling would continue to appreciate next week as a result of end of month inflows.”

The shilling, according to Tanzania Securities analysis year-to-date has slightly gone down by 0.56 per cent to 1,620/-. 

BoT earlier had said the current depreciation level of the shilling was a “normal shock” which could be absorbed well by the markets without derailing macroeconomic fundamentals.
Source: Daily News, reported from Dar es Salaam, Tanzania
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