Tanzania’s shilling plunges to another historical low

 The shilling continued with a plunge on Wednesday, breaking its own record low day after day to reach 2,080/- per one US dollar.

The National Microfinance Bank (NMB) quoted the shilling trading at buying 1,960/- while selling at 2,080/- and said further drop was predicted.

"Further fall is expected as demand seems to be enormous for across sectors with US dollar inflows at the very minimal," NMB said on its e-Market Report.

According to the Tanzania Securities, using Bank of Tanzania's (BoT) indicative Foreign Exchange Market rate, the shilling has depreciated by over 13 per cent since January to 1,952/83 a dollar.

On year-to-year up to on Thursday, the shilling sunk by almost 20 per cent. CRDB Bank had other opinion showing the shilling was relative stable on Tuesday stabilising around the levels of 2020/2030 to a greenback.

"We expect the shilling to remain more or less around these levels during today's trading session," the bank said on its Market Highlights.

While depreciation of the shilling may be a boon to exporters as it makes their products and services more competitive, it spells doom to importers as imports become more expensive.

Mzumbe University Senior Economics Lecturer, Prof Honest Ngowi, said shilling depreciation has far-reaching effect on the economy as whole since the country is a net importer.

"If the shilling goes down, imported goods automatically becomes expensive to push inflation up," Prof Ngowi said. In May inflation has climbed some 0.2 per cent age points to 4.5 per cent, though the shilling was not blamed rather food index.

On Thursday, international media have it that emerging market currencies and stocks fell on Monday, coming under pressure from a climbing dollar after betterthan- expected US housing data.

The dollar index hit its highest level in two weeks after data showed April housing starts at the highest in almost 7-1/2 years, rekindling concern that the US Federal Reserve could hike interest rates sooner rather than later.

Source: Daily News, reported from Dar es Salaam, Tanzania

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