19 February 2013

Tanzania: Shilling Remains Shaky

THE shilling is expected to lose ground further this week after oil importers entered the market decisively while inflows are limited, money markets have warned.

The shilling which is struggling to hold its ground, saw itself losing the battle against the US dollar as in most trading demand surpassed inflows in both the corporate and interbank market. A greenback at the opening of the week was bought at 1,627/- at commercial banks, the highest in the last 15 month since the local currency depreciated to the historical low of 1,800/-.

Standard Chartered Bank said they expected a similar trend with a view that the shilling would further depreciate on the back of declining inflows. "Low to medium price volatility is expected in the market today (yesterday)," Standard Chartered said on its Daily market report.

Another bank, National Microfinance Bank (NMB), said the shilling continued to weaken against the dollar during last week's session as oil importers finally entered the market decisively. NMB said: "Indeed, further weakness is expected as more US dollar demand from the oil and manufacturing sectors continue to pour into the market".

Tanzania Securities weekly market report ending last Friday showed that the shilling on weekly average remained flat against the greenback, trading at a range of between 1,575/- and 1,655/-.

According to the Bank of Tanzania (BoT) Monthly Economic Review of January, a total of 94.1 million US dollars was transacted in the interbank foreign exchange market (IFEM) in December 2012, compared to 135.5 million US dollars transacted in November 2012.

During the period, the shilling appreciated slightly against the greenback trading at an average rate of 1,578/41 per dollar compared to 1,580/51 per dollar in November 2012.

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