Tanzania shilling slides to record lows

The shilling closed last week on a weaker footing sliding to historic lows despite the month end effect that normally helps the local currency to appreciate.

The demand of US dollar last Friday, from across sectors, entered the market with a very active trading session in the interbank foreign exchange market.

The shilling plunged to the lowest level of buying/selling 1825/1905, as quoted by National Microfinance Bank (NMB) Friday’s market report.

“The shilling closed last week on a weaker footingÉ” “Further weakening is expected as greenback demand seems to persist,” NMB says.

The bank last Thursday said the local currency is still at risk of weakening despite month end effects with expected greenback demand from manufacturing and petroleum importers.

After the end of Thursday forex trading, Exim Bank says: “We expect the shilling to appreciate as we approach end of the (first) quarter.”

However, the demand from manufacturing and petroleum sectors derailed the shilling’s effort to rally high against US dollar. 

Bank of Tanzania Monthly Economic Review of February, shows that total import bill for year ending January decreased by 3.0 per cent to 10.82 billion US dollars from the corresponding period in 2014.

“This development was largely driven by a decrease in imports of intermediate goods, notably oil and fertilizers,” BoT report shows.

On month-to-month basis, the oil bill went down by 26 per cent to 211 million US dollars in January while fertilizer dropped by 60.3 per cent to 6.0 million US dollars in January.

On international markets, NMB says, the dollar sank to a fiveweek low against the yen on Thursday, hit by the combination of another round of poor US data.

The dollar was also more than half a per cent lower against the euro, extending a poor run that has seen it drop around 5 cents in two volatile weeks.

The Euro traded at $1.1042 per dollar in Europe, just above a threeweek low. However, on Friday the greenback rose across the board, extending a rebound begun the previous day after Federal Reserve officials signalled they were still on track to raise interest rates this year.

Meanwhile, NMB reports that the local money market is of healthy liquidity with overnight lending rates at weighted average 6.1 per cent.

Treasury bill auction on Wednesday was oversubscribed by over 184bn/- with weighted average yield going further down across all tenors.
Source: Daily News, reported from Dar es Salaam, Tanzania
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