Tanzania's shilling has remained relatively stable for the last one month, the central bank's July Monthly Economic Review has revealed.
The central bank data show an exchange rate of Tsh 1,584/13 per US dollar at the end of June compared to Ts 1,584/84 per US dollar of the preceding month.
"On annual basis, the shilling depreciated by 1.5% from Tsh1,560/08 per US dollar recorded in June 2011," the BoT's monthly economic review said.
According to the monthly report, in June, $114.2m were traded in the Inter-bank foreign exchange market (IFEM) slightly higher than the $106.5m transacted in May.
BoT participated in the market by selling $ 28.3m on net basis compared to $45.9m sold in the preceding month, the report said. Meanwhile, interbank volume doubled to Tsh31.8b ($20.14m) from Tsh15.8b ($10m).
"The market is expecting the volume to remain around this region for the next two days before slowing on the back of the bills auction which is forecast to be oversubscribed," Standard Chartered Bank said last week.
The highest rate was flat at five per cent whilst the lowest rate dropped to its usual low of 0.5% from 3.5%. Average rate decreased to 4.46% from 4.63%.
According central bank, during June 2012, the volume of transactions in the Inter-bank cash market amounted to Tsh733.6b ($464.95m), higher than Tsh639.1b ($404.76m) transacted in May 2012.
"Overnight placements accounted for 82.6% against 75.1% recorded in the preceding month. The overnight interbank cash market rate decreased to 14.56% from 16.82% recorded in May 2012, reflecting improvement of liquidity in the banking system," the report said.
However according to the National Microfinance Bank (NMB), the local market was still liquid although the shilling lost the battle against the greenback, sliding by Tsh 5 compared to the end of last week.
The shilling traded at Tsh1,575/1,590, over five shillings down from Friday's close," NMB said in its e-market report.
Standard Chartered Bank said the dollar was picking up against the shilling due to increased demand in the market.