THE shilling continued to hold steady against US dollars, thanks to inflows support from mining and commodities, especially tobacco and pulses.
The pair were quoted by NMB Bank, one of the biggest forex dealers, trading at 2,315/2,354 levels on Tuesday.
The bank said in its e-market daily report that the "same trend is expected in the weeks ahead."
The shilling clutched steadily against the greenback despite some noticeable demand from oil marketing companies (OMCs), SMEs and manufacturers.
"We observed demand from importers specifically OMCs with CL (Letter of Credit) maturities, SMEs and manufacturers," NMB said on Tuesday.
The steadiness was supported by inflows from mining and commodity traders as tobacco, pulses and cotton seasons continue.
The local currency stability is poised to cushion shocks from high global commodity prices thus absorbing imported inflation shocks.
The Central Bank Monetary Policy Committee (MPC) statement issued late last week said the external sector continued to experience high commodity prices.
"At the backdrop of rising inflationary pressures, the MPC approved the Bank of Tanzania (BoT) to reduce the speed of expanding liquidity in the remainder of 2022, to tame inflationary pressures from the demand side, while safeguarding the growth of the economy," the statement said.
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To support the shilling from fluctuating, the MPC also reiterated the need for BoT to maintain adequate foreign exchange reserves, to cushion the economy from the negative impact of high commodity prices in the world market.
"Nevertheless," the report said, "foreign exchange reserves remained adequate covering 4.6 months of imports and the exchange rate was stable".
However, high food, energy and fertilizer prices in the world market pose an upward risk to future inflation.
The inflation increased slightly from 4.4 per cent in June to 4.5 per cent recorded last month.
Meanwhile, the money supply expanded consistent with the target, in response to accommodative monetary policy and improving economic activities.
Credit to the private sector was strong, at 9.9 per cent in 2021/22, broadly in line with the target. Fiscal operations were satisfactory and in line with the target for 2021/22, with revenue collection improving.
