THE shilling lost battle on Wednesday by going down 0.3 per cent after holding steadily against the US dollar in the last two months.
The pressure on the shilling started early this week as demand from manufacturers and oil importers unmatched inflows from tourism and agriculture sectors.
CRDB Bank said that the demand for greenback soared against the supply leading to a depreciation of 0.3 per cent to close at 2,205/- compared to the previous day close of 2,197/-.
“Other East Africa currencies have remained stable against US dollar and we expect the shilling to trade flat in today (Thursday) trading,” CDRB said in market highlights.
The signs started to show at the opening of the week as pressure mounted to see the shilling closing between 2,188/- and 2,198/- on Tuesday.
“This has been attributed to slow down of inflows from tourism and agriculture with the growing demand from manufacturing and oil importers, the bank said. “…support is expected to come by end month as corporate sell dollars to settle end month obligations”.
National Microfinance Bank said the market closed at 2,175/2,209 levels on Tuesday and shilling is still seen to be under pressure as demand further consolidates.
Since the beginning of the month the shilling has gone down roughly some 7/- to close yesterday session at 2,195/69 according to Bank of Tanzania figures.
The shilling has maintained its firmness after closing the last week stable against the US dollar amidst moderate demand from oil sector. On other hand, going by BoT figures, the shilling since January has depreciated 1.57 per cent to 2,195/69 of yesterday.
BoT early this month said the shilling was expected to strengthen this year as inflows are expected to improve.
The central bank said currently trends show the shilling has find a new market equilibrium which was good for economic stabilization. International Monetary Fund (IMF) said early this year that the shilling depreciation was largely reflected by the global strength of the dollar.
The IMF also said domestic factors contributed to the volatility, and such as the loosening of monetary policy in late 2014. “Staff’s preliminary assessment is that the recent depreciation has brought the real effective exchange rate, which was last assessed in 2014 to be somewhat overvalued, closer to equilibrium,” IMF report showed.
