18 September 2012

Tanzania: Experts Project Shilling Stability

THE shilling is expected to remain relatively strong in the coming days, money experts have said.

Analysts' predictions are based on the fact that the shilling has firmed against US dollar, thanks to less demand in the market.

Standard Chartered Bank said the shilling held remained strong against the greenback to close the week at 1,585/- as there was less demand in the market. "...We expect to see a similar trend with a slight bias on a stronger shilling," the bank said in its Daily market report, noting that "volatility is expected to remain low to medium".

The pair shilling/dollar, according to Barclays, changed direction last week trading downward throughout the week. "The pair broke below the level of 1,580/- and continued to trade in the range bound," Barclays said in its e-newsletter. Since January, the shilling has been trading at a steady range signifying that the monetary policy to reverse the free fall of the local currency about a year ago paid-off.

The shilling, according to the Bank of Tanzania (BoT), has been trading at between 1,573/- and 1,590/- for the US dollar, which is a better range-rate compared to the last September's 1,825/- a dollar. But, money analysts agreed that the local currency clings steadily at the foreign exchange market, saying the amount is still high to subdue prices of imported goods and services.

"Yes, the shilling held firmly in the last eight months but still it is not favouring imports for the weaker the shilling the higher the prices of imported goods...the level should be at least below 1,200/-," a market analyst told the 'Daily News.'But the BoT has maintained that it seeks to strike a balance between reasonable levels of exchange that will facilitate imports but promote exports as well.

Tanzania Securities said in its Weekly Commentary that the shilling gained some ground against the dollar while it recorded a slight decrease against the UK pound sterling at the end of last Friday.

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