THE shilling has dropped to two weeks low since the beginning of the year on the back of weak inflows and the reverse is out of sight until the end of the month.
The local currency opened the year trading between 1,590/- and 1,610/- against US dollar to 1,600/- and 1,623/- on Tuesday, while the forecast looks gloomy. Money market analysts said the shilling lost the battle following high demand from oil and manufacturing sectors on the back of declining inflows that were expected from NGOs.
The Standard Chartered Bank said for the second day on Tuesday the shilling lost ground against the dollar on the back of increased demand from the oil sector and declining inflows. "We, (however), expect the pair to stabilise at current levels with medium price volatility," the bank said on its daily report.
Another bank, the National Microfinance Bank (NMB) said as the greenback inflows from NGOs remain small, dollar demand was likely to see the shilling continue to lose ground before any meaningful reversal by month end. The shilling weakened further (...) against the US dollar..., as market participants bought the greenback with the psychological 1,620/- level in sight," NMB said.
Tanzania Securities Chief Executive Officer, Moremi Marwa said given the last year fluctuation pace of about one per cent, the local currency was relatively stable and likely to remain so. "It's too early to predict on the shilling's movement for this year as the current year's parametres might not be the same as last year's macroeconomics fundamental are pointing to the right direction of the local currency stability in this year," Mr Marwa told the 'Daily News.'
Barclays Bank said the greenback made marginal gains against the shilling as demand for the dollars remains high. "The US dollar opened at an offer of 1,612/- but by close of business day, it was being sold 5/- higher at 1,617/-," the bank said yesterday via its e-newsletter.