THE shilling traded higher against the dollar on Monday, appreciating by 5/-, thanks to the inflows from coffee and Bank of Tanzania (BoT) intervention in the market.
The market closed on Monday at 1589/1612, five shillings firmer than Friday's, according to the National Microfinance Bank (NMB) e-Market report.NMB, the biggest bank in term of profitability, said on Tuesday that the demand from Small and Medium Enterprises (SMEs) and corporate was met by inflows from coffee and central bank intervention.
Barclays Tanzania said the market opened to an active trade by dollar sellers that helped to push up the shilling strength in the market on Monday."The inflows saw the local currency marking a gain during Monday's trading session..." the Barclays Bank said.
On the other hand, Standard Chartered Bank said the Monday trading was relatively flat against the greenback in the market on the back of declining demand from the oil and gas sector."We anticipate a similar trend today (yesterday) with a bias on a stronger shilling with price volatility expected to be medium to high," the bank hinted.
However, despite the shilling appreciation on Monday, it has depreciated by 3/43 against the dollar since the beginning of this year - 15 days ago.The rate quoted by commercial banks, at between 1,580/- and 1,620/- a greenback, is the highest compared to the 1,560/- and 1,590/- that was quoted during the same period last year.
But in a year-to-year comparison, the shilling has been trading almost at a similar figure, according to data from the central bank. The shilling opened the year at 1579/98, which is similar to 1587/61 of 2012.But economists urged that the shilling current level does not support imports rather fuel up prices of imported goods and services in the market, pushing up consumer price index.
During the year ending last November, the current account recorded a deficit of 3.76 billion US dollars compared with a deficit of 3.6 billion US dollars recorded in the corresponding period in 2011.
"The widening of the current account deficit is mainly due to an increase in imports that outweighed the impact of the increase in export of goods and services," BoT said in the December Monthly Economic Review.
The value of export of goods and services amounted to 8.53 billion US dollars against the value of import of 13 billion US dollars at the end of last November.