Shilling firm as Christmas festival nears

The shilling continues to appreciate as Christmas and New Year festival approach, with more demand for local currency experienced during the past two weeks.

Shilling appreciation will reduce the prices of imported goods as importers will need less to purchase foreign currencies to the advantages of domestic buyers during end of the year celebrations.

Market analysts say as the end of the year nears, many people will need the shilling to foot bills related to the celebrations. On the other hand, the corporate demand for local currency will increase due to tax payments obligation and payment of salaries and among others.

Exim Bank quoted the shilling closing the week, at 1607/1612 to the US dollar stronger than 1610/1617 a week ago. While National Microfinance Bank (NMB) indicates the shilling appreciated to 1596/1616 against a greenback.

Exim Bank said on its ‘Market Pulse’ that the shilling is expected to hold further as some corporate clients are offloading dollars towards the end of the year to make payments in local currency.

“… (The) shilling is expected to hold steadly against the dollar in the days ahead and could strengthen slightly,” the Exim Bank said.

“This is helped by a slowdown in demand for US currency and year-end inflows from corporate clients.” The NMB said the shilling continues to appreciate despite increase demand from oil importers thanks to inflows from tourism and agriculture sectors.

 “… (The) shilling continued to strengthen against the greenback on Thursday despite the witnessed demand particularly from oil importers,” the bank said in its e-Market report.

The shilling appreciation trend came at time inflation rate for November dropped down slightly to 6.2 per cent from 6.3 per cent. However, annual price rate for food consumed at home and outside home increased to 7.6 per cent.

The good thing on the 12-month index change was for non-food products which decreased to 5.7 from 6.1 per cent over the period under review.

Christmas and New Year being the festivals of parties and exchanging gifts, the slightly decline of prices are welcoming news as people will have more spending power.

An economist, Leonard Mwanga said the trend of the local currency and the marginal decline of the inflation was expected to push up consumers’ purchasing power.”
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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