7 February 2013

Tanzania: Shilling Seen Gaining Marginally Vs U.S Dollar

THE shilling marginally gained 3/-, thanks to the inflows from non-governmental organisations (NGOs). The commercial banks quoted the shilling trading at 1,632/- for a US dollar after the gain.

However, market analysts said, the shilling gain was expected to hold temporarily following the demand from the energy sector to remain high while supplies are limited. NMB said the 3/- gain against the greenback during Tuesday's session, was supported by inflows from NGOs while the demand, especially from energy sector remains strong.

The local currency is set to enjoy only limited gains as US dollar demand from the energy sector remains high," NMB said on its e-Newsletter. Another bank, Standard Chartered, said the pair shilling/dollar saw no much movement on Tuesday as inflows were relatively sufficient to cover market demand.

"We expect the pair to trade at similar levels today on the back of balanced inflows with medium price volatility," the bank said. The shilling, on other hand, opened the week firmly on Monday before it appreciated the following day though it has slipped almost 5.0 per cent to 1,638/- in comparison to the amount traded last January.

The depreciation of shilling has a far reaching impact on imported goods and services. The second-hand car dealers have already expressed their grievance on the negative impact on their businesses, because vehicle are now expensive almost 30 per cent compared to last January prices.

They said the business "was very tight" as sales volumes have dropped between 40 and 60 per cent in the last two to three months. Last January dealers sold an average of 10 cars compared to four last month. Yesterday, the Energy, Water and Utilities Regulatory Authority (EWURA) announced a slight increase of petrol price by 12/- a litre or 0.59 per cent to 2005/- in Dar and Serengeti 2,228/-.

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