Shilling stabilises, hopes for further strength

The shilling is expected to appreciate slightly against the US dollar as the market closes over to a new month amid ample supply of the greenback from exports of agricultural produce.

Financial market analysts remain optimistic that the shilling to remain stable as demand slows down. Standard Chartered Bank said on its daily market report yesterday that moderate volatility was projected as dollar supply from corporate also started to slow down as most month-end shilling obligation are covered.

“We expect the shilling to appreciate slightly as we close over to August… there is still supply from agriculture sector,” Standard Chartered said. 

The National Microfinance Bank said on its e-market report on Tuesday that the shilling retrieved earlier losses against the greenback to gain by 2/- and closed the session at 1615/1631.

“The gains were buoyed by month end and Agriculture inflows though demand still remains,” NMB said.

The local currency, according to Bank of Tanzania, has depreciated by 2.6 per cent since January to trade at 1621/06 as of Wednesday. The depreciation rate registered on Tuesday was the highest since December 2011 when the shilling was trading to the similar rates.

The worst depreciation rate or 1,800/- against the dollar was recorded in October 2011. Two months, ago the central bank described the shilling depreciation as a “normal shock” that could be absorbed well by the markets without derailing macroeconomic fundamentals.

However, Mzumbe University’s Dar es Salaam Business School lecturer Dr Honest Ngowi said the demand for dollar had gone up drastically, calling for proper analysis of the trend.

“Principally, we export less than we import. There is a need to re-look at what we are importing because some of the items that we import can be produced locally,” said the senior lecturer, adding: “We are losing our opportunities through importation of goods that we could produce, domestically.”

Tanzania Securities, a stock brokerage firm, said the shilling remained stable against the greenback to trade at a range of between 1,582/- and 1,662/- at money markets. 

The firm’s analysis, covering commercial banks’ trading data, shows that the shilling has in the last seven months lost 0.69 per cent from 1,610/91 to 1,622/- of Wednesday.
Source: The Daily News, reported from Dar es Salaam, Tanzania

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