Shilling remains struggling

Image result for shilling tanzaniaDespite remaining stable over the weekend, the shilling is likely to wane, unless sudden inflows back the local currency.

The shilling which in the last nine weeks lost some 4.0 per cent, is trading at a thin margin as demand outpace supply after donors cut 2014/15 budget support.

National Microfinance Bank (NMB) gave the reason for the shilling to remain stable, was on the back of thin trading due to sluggish US dollar demand.

“The shilling remained stable on Friday to trade against the US dollar at 1,790/1,865, amidst thin trading as many client focused on tax obligations,” NMB, the largest bank in Tanzania said.

The bank added: “As demand remains in the market, the shilling is likely to weaken, unless sudden inflows support the local currency.”

However, in the last one week ending last Friday, the shilling depreciated slightly by about 0.6 per cent to 1,800/76 from 1,790/32.

Another bank, CRDB said, the shilling remained relatively stable against the dollar during Friday’s trading session, opening and closing at the levels of 1835/1845.

The shilling depreciation was the result of greenback’s appreciation that hit eleven and half years high against the euro last Friday, as interest rate differentials widened in favour of US Treasuries.

On other hand, the euro slumped to an 11-1/2 year low of 1.0963 US dollar. The shilling appreciated against Euro by almost 34/- to 1991/- from 2025/- in one week that ended last Friday, according to the Bank of Tanzania.

South Africa’s rand fell to 13-year lows and government bonds also slid sharply on Friday, as emerging markets were heavily sold off after US job numbers strengthened the case for the Federal Reserve to hike interest rates.

The rand tumbled more than 1.5 per cent to a session trough of 12.0310 to the dollar, its weakest level since early 2002.
Source: Daily News, reported from Dar es Salaam, Tanzania

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