Strong demand for US dollars from the energy and manufacturing sectors weakened the shilling that traded at the rate ranging between 1,601 and 1681 on Tuesday.
“The shilling experienced slight volatility on Monday and Tuesday as importers continued to impose pressure in the market,” stated the Standard Chartered Bank on its daily market commentary.
Dollar supply from agricultural sectors particularly tobacco remains too insufficient to support the mounting demands. However, market analysts say the shilling volatility is short-term situation as the overnight lending rates continued to rise to 10 per cent on Monday, indicating continued demand for the shilling in the market.
“The Tanzanian shilling depreciated further against the dollar to close at 1,640/1,650 on Monday due to strong demand for US dollar from the energy and manufacturing sector” stated the NMB e-markets. The Bank of Tanzania (BoT) maintains that depreciation was normal currency behaviour but it takes short period to stabilise.
The BoT monthly economic review for April shows that the oil bill is the single heaviest component on the import lists that accounts for about 36 per cent of the total imports that make high spending of foreign currencies. In the month under review, the value of oil imports increased to 3,735 million US dollars from 3,651.5 million US dollars in the corresponding period in 2012.
According to the report, the total value of imports of goods and services decreased by 0.2 percent to 12,827.9 million US dollars in the year ending April 2013 from 12,859.8 million US dollars in the corresponding period in 2012. The slowdown was observed in imports of machinery and fertilisers.
Source Tanzania Daily News
