Tanzania: Shilling feared to weaken further

The shilling is expected to weaken again as it will continue to be under pressure next month from retail sector increasing demand for US dollars. 

The shilling, according to money markets experts, will fall under heavy pressure from increased imports from the retail sector from far East --especially China.

The sector, combining with demand from oil and manufacturing, may drive the shilling to a year low level of 2,200/- seen in the third quarter of 2014. 

CRDB Bank said on its last Friday Market Highlights that the local currency ended Thursday’s trading session around the levels of 2155/2195.

“As we approach February and the retail sector readies itself for the purchase of imports from China, the shilling is expected to continue to be under pressure from high dollar demands,” CRDB predicted.

The Bank of Tanzania (BoT) foreign exchange data showed that the shilling opened the year exchanging at 2,161/46 but slid to 2,192/72 of end of last week. 

Another bank, National Microfinance Bank (NMB) said last Thursday’s session saw the shilling weaken slightly on back of sustained dollar demand from oil and manufacturing.

“The shilling remains on a weak footing as demand persists, although a reversal is likely as demand tapers off above the 2,200 mark,” NMB said on its e-Market report. 

The shilling sliding might be affected by the greenback gaining in international arena.

According to CRDB Bank, the dollar rose last Thursday, hitting its strongest against the euro in two weeks, after European Central Bank President Mario Draghi suggested the bank could soon launch additional stimulus.

The euro recovered slightly after the speech, and was last down 0.7 per cent at $1.0815. 

On other hand UK Sterling pound slid to a seven-year low against the dollar on the same day and struggled against the euro as a brutal sell-off that started a month ago accelerated amid diminishing prospects of a near-term interest rate hike in Britain.

Sterling -- down 10 per cent since early December -- fell 0.8 per cent to $1.4080, its lowest since mid-2010, before recovering slightly to trade at $1.4111, down 0.6 per cent on the day.

The rand clawed back some ground against the dollar on Thursday, helped by an upswing in global market sentiment, but remained vulnerable due to the dim economic outlook for South Africa.

The rand rallied to a session high of 16.5700, up more than 1.0 per cent on the day, and was trading at 16.6000 by 1545 GMT, a 0.9 per cent gain over Wednesday’s New York close.
Source: Daily News, reported from Dar es Salaam, Tanzania
   
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