The shilling fell below strong support
levels to hit a three-month low of 1580.11 yesterday, as the market saw
slight increase in demand for US dollars.
The shilling to dollar exchange rate
fell from 1577.97 of early October to yesterday’s rate, while a gradual
correction was expected from some agro and tourism related inflows.
“The shilling to dollar ratio
remains high as demand pressure is sustained,” MNB said on its
e-newsletter.
It added: “A gradual correction is in
sight and some agro‐ and tourism related inflows are expected to cool
the market,” implying the shilling could again gain in strength.
The
shilling maintained its range bound since January to trade between
1,550.00 and 1,598.00, as Bank of Tanzania (BoT) data shows but in
recent weeks, it started losing its ground.
On the other hand, commercial banks
quoted the shilling trading between 1,585.00 and 1,603.00 a dollar,
which is the lowest rate since January, this year. Standard Chartered
Bank attributed the shilling’s battle loss yesterday to slight increase
in the demand for dollars.
“Today (yesterday) we anticipate the
dollar to continue its gain as its demand is expected to increase,”
StanChart said “volatility will remain low to medium,” it added.
Tanzania Securities Chief Executive Officer, Moremi Marwa, told the
‘Daily News’ recently that the major reason for the shilling’s fall in
the last three months was due to strong demand for dollars from
importers.
“We are out of traditional cash crop
exports and in the second quarter a mine (Geita Gold Mine) was
temporarily closed for maintenance… this impacted negatively on the
supply-side of foreign exchange,” Mr Marwa said.
He also said there was increasing demand
for fuel for normal vehicle consumption and energy generation, hence
pushing up the demand side of the dollar in the forex markets.
The
closure of Geita Mine, one of the biggest gold mines in the country,
reduced the availability of forex and it took time to put the situation
back on track.
The mining sector grew by 1.2 per cent
in the second quarter, compared to 5.6 per cent of last year mainly
because of Geita Gold Mine’s temporary closure.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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