Tanzania: Agricultural exports inflow lifts shilling

The shilling continued to strengthen against the US dollar, thanks to the inflows of proceeds from the agricultural produce exports and non-governmental organisations (NGOs).

“With improved agricultural inflows and tight liquidity, further strengthening is likely,” the NMB Bank said in its e-market report that indicated exchange rates of USD/TZS 2,105/2,185.

NMB Bank said the shilling strengthened on Monday with a support of greenback inflows from NGO’s and Agricultural sector as well as tight liquidity in the local money market.

According to the report, liquidity tightness is still evident in the local money market with most market participants looking for short term funds with interbank overnight borrowing rates at the highs of 40 per cent.

The shilling has been on the gaining side in the last few weeks after the government received 200 million US dollars from China Development Bank, in addition to 100 million US dollars from the World Bank and 77 million US dollars from African Development Bank.

The Bank of Tanzania (BoT) Governor Prof Benno Ndulu said in an interview with the Daily News recently that the funds received were sufficient to bolster foreign-exchange reserves and plug budget deficit.

The government shelved its plan to raise 600 million US dollars through a private placement managed by the Rand Merchant Bank of South Africa to bolster its foreign-exchange reserves and plug budget deficit due to Greek eurozone crisis.

The Exim Bank Market Pulse on Friday quoted the shilling trading at 2125/2185 at the opening and closing of the market

The Kenyan shilling was a touch weaker in early trading on Monday due to spillover demand for dollars from last week as traders eyed possible central bank action to stem its depreciation.

The shilling has been under pressure from the global strength of the dollar, a slide in valuable tourism revenue and a widening current account deficit.
Source: Daily News, reported by Sebastian Mrindoko, from Dar es Salaam, Tanzania

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