'Tanzanian shilling still weakening against US dollar'

Tanzanian shilling continues to weaken against US dollar

THE Tanzanian shilling weakened against the US dollar during the past week due to increased corporate demand, but the Bank of Tanzania (BoT) is reported to have held the slide in check by selling some of the dollars in its own reserve.

According to a Reuters report by early yesterday morning the shilling was trading at between 1,242 and 1,250 to the dollar, compared with 1,227--1,233 at the close of last Wednesday.

Local dealers said as the shilling proceeded to weaken further from the beginning of this week, the BoT came into the market to sell dollars.

’’Two days ago the market went as high as 1,270 on corporate demand - then the central bank intervened and sold dollars,’’ Christopher Makombe, a dealer at Standard Chartered Bank in Dar es Salaam, said in an interview.

Other traders confirmed that the central bank was present in the market on Wednesday too.

Dealers said they expect the shilling to trade in the 1,245-1,260 range against the dollar in coming days, and were watching central bank activity in the market for more direction.

On the other hand, the Kenyan shilling firmed against the dollar in the week to Wednesday, while the Ugandan shilling also eased along with the Tanzanian currency.

The Kenyan shilling is said to have strengthened against the dollar thanks to banks unwinding long dollar positions and agricultural export flows.

Early in the day, commercial banks traded the Kenyan currency at between 66.80 and 66.90 to the dollar, compared with 67.05-67.15 at last Wednesday’s close.

’’Basically it’s the end of month demand which has fizzled out. We have also received good flows from horticulture, floriculture,’’ said a dealer at Barclays Bank in Nairobi.

Horticulture is now Kenya’s second highest foreign exchange income earner after tourism.

Analysts said the Kenyan shilling is expected to trade in the 66.50 to 67.00 range in coming days, with a bias for further strengthening due to limited demand for the US dollar.

In Uganda, the shilling eased slightly against the dollar due to some corporate demand in a week characterised by fluctuations.

Early morning, commercial banks in Kampala posted the local unit at between 1,748 and 1,753 against the dollar, compared to last week’s rate of 1,744-1,752.

Traders said the Ugandan shilling fluctuated against the dollar during the week, initially weakening to between 1,760 and 1,765 then recovering to trade at 1,745-1,750 due to dollar inflows.

Dealers said market sentiments pointed to a stronger Ugandan shilling if the current low demand for the greenback prevails.

The Ugandan shilling is expected to trade within the 1,745-1,760 range in the coming days, the dealers said.


source: This day