Tanzania Shilling firms against US dollar
The shilling has been trading at a steady range for the last eight months signifying that the monetary policy to reverse the free fall of the local currency about a year go paid-off.
The shilling, according to the Bank of Tanzania (BoT), has been trading at between 1,573/- and 1,590/- for the US dollar since January this year. BoT’s Governor Prof Benno Ndulu said the range is much better compared to the last September amount at 1,825/- a dollar while volatility is at the minimal level.
“Economically, this is a great achievement as import traders can plan amicably unlike when the shilling fluctuates,” Prof Ndulu told reporters after he launched online auction of government securities, over the weekend. He said the shilling volatility was influenced heavily on the global financial crisis that hit the world between 2008 and 2010 which did not spare even international currencies.
At the end of last week, National Microfinance Bank quoted the shilling at 1,568/1,577 to the dollar, little changed from 1,565/1,577 in trading session Thursday. “(However), the shilling is expected to weaken slightly against the dollar in the days ahead as traders anticipate growing demand for the greenback from importers and retail traders,” NMB said in its e-Market report.
Another bank, Standard Chartered, said the shilling traded flat against the US dollar for yet another day on Thursday because there was little activity in the market. “Today (Friday) as it’s the last day of the month (August), we expect to see a slight increase in demand with low volatility,” the bank said in the Daily Market Report.
But money analysts agreed that the local currency cling steadily at the foreign exchange market but said the amount is
still high to subdue prices of imported goods and services in the social. “Yes, the shilling has hold firmly in the last eight months but still it is not favouring imports.
The higher the shilling the higher the imported goods-the level should be at least below 1,200/-,” a market analysts told the ‘Daily News’. But the BoT has maintained that a balance should be strike between reasonable levels of exchange that will facilitate imports but as well as exports.
The central bank argue that importers need foreign currency for ordering goods and services abroad which are obtained after exporting the country’s goods. Therefore the higher the dollar makes exports expensive.
By ABDUEL ELINAZA, Tanzania Daily News
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