13 February 2013

Tanzania Shilling Remains Stable Against U.S. Dollar

THE Tanzania shilling has maintained existing levels against the US dollar in the last two days but risks remain strong.

The firm stance, according to money market specialists, was achieved after the market experienced balanced flows from corporate and interbank market.

"We anticipate a similar trend today (Tuesday) with low to medium price volatility," Standard Chartered Bank said yesterday on its 'Market Daily Report'. The commercial bank quoted the pair shilling/dollar trading at 1607/1623.

The National Microfinance Bank (NMB) said the shilling traded steadily against the greenback to close at 1607/1623 on Tuesday. "The local currency is still expected to depreciate as US dollar demand from oil importers remains significant, albeit on the sidelines," the bank said.

The Bank of Tanzania said in mid-year review of the Monetary Policy Statement issued this week; the shilling nevertheless was stable in the first half of 2012/13. The bank said the "Interbank Foreign Exchange Market (IFEM) stabilized following implementation of tight monetary policy and regulatory measures pursued by the Bank towards the end of 2011".

As a result, the central bank went on, the shilling remained relatively stable, fluctuating within a range of 1,574/03 and 1,586/18 against the US dollar, compared to 1,553/72 and 1,688/23 in 2011/12.

During the period under review, the BoT continued to participate in the IFEM for liquidity management purposes by selling 346.5 million US dollars out of 626.7 million US dollars transacted in the market.

On other hand, gross official reserves amounted to 4,069.1 million at the end of last December, sufficient to cover about 4.0 months of imports of goods and services, while gross foreign assets of banks were 887.1 million US dollars.

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