News Column

Shilling Steady Against the Dollar

August 6, 2014

TANZANIA shilling started the week experiencing some stability against the US dollar, but it will be a short-lived situation before importers demand grows up.

According to the National Microfinance Bank (NMB) e-market report, the Tanzanian Shilling remained stable against USD today, with bids ticking up towards the close of trading session, a sign showing importers demand might weigh in on the shilling in the days ahead if same conditions continue. Liquidity in the local money markets eased slightly, following July's month-end local payments.

Overnight rates traded at 15 per cent on average, with possibilities of further easing as liquidity returns to the market. And according to Market Outlook of Standard Chartered Bank, the shilling and the US dollar traded relatively flat on Monday as inflows matched outflows in the corporate and interbank market.

The same trend was expected to continue yesterday with a slight bias on a stronger dollar as demand start picking up in the market. The market pulse by Exim Bank states that the Tanzania shilling was flat against the dollar at the end of last week with traders quoting USD/ TSH 1652/1667 when the market opened and closed.

The shilling is expected to continue trading on the same levels in the days ahead. In its market report, the Barclays bank said the local currency experienced another stable last week as market players were relatively quiet and trading slowed down as the market was closed for two days due to the Eid holidays.

The shilling showed signs of strengthening at the close of the week as dollar inflows increased. The Mzumbe University Senior Lecturer, Dr Honest Ngowi, said on Tuesday in an interview that for the country's value which is externally determined, it is difficult to maintain its stability against strong world currencies.

"Tanzania being a net importer will continue making the shilling bow against the dollar, unless concerted efforts are in place to cut down unnecessary imports," he said.

He added, to give a long last stability to the shilling, there is need to increase volume and diversify exports in order to get markets with premium prices. Similarly, he pointed out the need to promote international tourism to boost inflows into the country.

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Source: AllAfrica

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