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Shilling in 11-month stability

Shilling in 11-month stability

November 5, 2017

 

The Central Bank data showed that the shilling opened the year at 2,186/21 but closed at 2,247/78 on Friday—depreciated by 2.7per cent. However, economists have it that the impact of 2.7 per cent fluctuation on the economy was insignificant and slighter pinch would be felt on imports.

 

The Bank of Tanzania (BoT) made a clarification after Bloomberg erroneously reported that the shilling nose-dived to 2,481/83. “The shilling closed the Friday market trading between 2,246/50 and 2,247/60…Bloomberg are correcting the matter,” BoT said in a statement issued late Friday.

 

According to BoT, after communicating with Bloomberg on the matter, they confirmed that there were some contributors who had entered incorrect data and thus pledged to make cor- rections.

 

“The Bank communicated with Bloomberg and they con- firmed that there were some contributors who had entered incor- rect data and therefore, they began to make corrections,” reads part of the statement.

 

University of Dodoma lecturer, Dr Paul Loisulie said BoT’s quick clarification on the matter was crucial since it assured in- vestors that their capital was safe. “Investors are always very keen on the stability of the shilling against US dollar, therefore, the spread by Bloomberg of a wrong report would have caused chaos in the investment sector,” he noted.

 

Tanzania Securities also reported on Friday that the ex- change rate on weighted average as per BoT indicative rate was “2,237/33 with 2,226/20 buying and selling at 2,248/46,” against greenback. Data from trading economics, however, showed that the shil- ling reached an all-time high of 2,260/80 in June 2015.

 

The re- cent years’ low was recorded at 1,014/30 in December of 2004. TIB Development Bank economist, Dr Hildebrand Shayo said the global major currencies also yo-yoed after China’s yuan was accepted as international unit.

 

“This is a global phenomenon at the moment, caused by yuan acceptance and US new policy on manufacturing. “But back home, the shilling is demonstrating its true value aligned with current [industrialisation] policy of adding value of our raw materials,” Dr Shayo said. The economist cum-banker said the impact could have been much felt if the volume of country’s export was huge.

 

“The impact is felt slightly on imports and mainly on fuel. This is a major component that eats our forex, “Dr Shayo said adding “otherwise the impact is not significant.”

 

On Thursday, CRDB Bank said pressure on the shilling continued to slowly decline after the shilling/greenback pair closed with a difference of 68 basis points, from the previous session pushed by matching supply and demand levels. Pressure on the local currency has started to ward off.

 

“Matching levels of demand and supply have contributed to the stability of the pair, but recent inflows from cashew nut stakeholders have added to the easing of the pressure on the local currency,” CRDB said on its Market Highlight report.

 

Another bank, NMB predicted the shilling to continue gaining against US dollar in days ahead. “We [NMB] expect the trend to continue tomorrow as we head for the weekend,” NMB said on its e-Market report. The bank added the second trading session of the month left the shilling gaining against the dollar on the back of sizable inflows from agro and institutions.

 

Yesterday, shilling traded between 2,164/- and 2,289/- per US dollar at NMB. Last year, BoT data showed that until October, 2016, the shilling maintained its stability after fluctuating by 1.18 per cent against US dollars in the past ten months.

 

The data showed that the shilling fluctuated from 2,161/48 of the turn of the year to 2,187/16 in October. The shilling-USD exchange rate, according to BoT, stabilised against the an average of 2,190/70 per USD, compared with 2,192/40 traded in June 2016. The shilling stability was cemented by exports increase that grew by 7.5 per cent to 9,810.4 million US dollar from the level recorded in the year ending July 2015.

 

Source:http://www.dailynews.co.tz/