THE Bank of Tanzania has intervened in the money exchange market for almost all of last week to save the shilling from tumbling further due to rising corporate demand.
The shilling maintained a steady trading range of below 1,600/- a US dollar in the last ten months but dwindled beyond the traditional mark since the beginning of this month, sending the market into jitters. According to BoT data, the shilling was trading as low as 1,602 a greenback since last Tuesday forcing the central bank intervention to rescue the local currency from further bashing.
Also the amount traded increased to between four and seven million US dollars during the last week which is the highest amount since the first week of September. The commercial bank quoted the shilling exchanging hands at around 1,609/- a dollar, revealing the presence of the central bank in the market in this week as well.
Standard Chartered Bank said yesterday that throughout the week BoT was 'very active in the market' to cool corporate demand hence enabling the shilling to stabilize at the current level. "The shilling is expected to uphold current levels as we anticipate the BoT to maintain presence in the market," the bank said in its daily market report.
The report further said the shilling/dollar pair ended the week almost where it began as the market saw no significant movement throughout the week due to low volatility. However, the amount traded last week was still the lowest compared to 16 million US dollars traded in a single day in January, which subdued to another one day amount of 12.85 million US dollars on June.
The average rate, though, reached 1,581.74 last Friday is the lowest since July when it clocked 1,582.94. Money market analysts have it that the shilling is poised to depreciate further, increasing the prices of goods and services and triggering inflation rate especially now that the economy is heading towards the year-end festivals.