Tanzania: Shilling Remains Steady Against Dollar

The shilling steadiness over the US dollars continued in the first 10 days of the year signalling a stable exchange rate ahead as cashew nuts earnings anchor the stance.

The shilling based on central bank data fluctuated insignificantly by merely 15/- since the opening of the year when trading against the greenback to close the Tuesday session at 2,309/29.

NMB Bank said in its daily e-market report that the shilling-dollar pair held steady on Tuesday trading session amid increased demand from importers and SMEs.

"[The] shilling held steady against the dollar as market activities improve," NMB report said.

The shilling on the commercial arena was trading at 2,320/- against US dollars which was almost a similar rate recorded at the beginning of the year.

"Inflows from agriculture and mining sectors continue to support the demand in the market," NMB, one of the largest lenders in the lands, the report showed.

The report said further that a similar trend was expected on today trading session "unless sizable demand enters the market," The central bank last November took a number of steps to stabilize the shilling including an increased supply of foreign exchange.

The stance paid off as, according to the latest Monthly Economic Review (MER), the shilling registered a slight appreciation against the US dollar last November, traded at an average rate of 2,304/64 compared to 2,306/58 per in the preceding month. The shilling also, MER report showed, registered an annual appreciation of 0.19 per cent from 2,309.12 per US dollar registered in November 2020.

"The shilling is projected to remain stable, supported by low inflation expectations, prudent monetary and fiscal policies and orderly foreign exchange market operations," the MER report said.

Also, the interbank foreign exchange market (IFEM) was characterised by an increase in the supply of foreign exchange last November, emanating from proceeds of exports of minerals, cash crops and tourism-related activities.

The BoT participated in the IFEM, by purchasing 85.2 million US dollars mainly for reserves and liquidity management purposes.

Meanwhile, total IFEM transactions amounted to 165.7 million US dollars last November, slightly below USD 168.7 million traded in the preceding month.

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