Shilling range-bound against dollar

THE shilling has closed the month traded range bound after being held by local currency demand to fulfill end year and month obligations.

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The shilling, according to National Microfinance Bank, traded range bound on Wednesday’s thin trading session against the US dollar. NMB said shilling held steady at 2,135/2,175 against the dollar backed up by month and year end obligations.

The bank attributed the range bound trend in e-Market report to “corporate taxes and other shilling year end obligations are due”.

The bank said with just yesterday trading session left to end the year, “a similar trend can be expected unless significant dollar demand enters the market”.

However, CRDB bank said, the interbank correction and greenback demands have caused the local currency thus lose its gains against the dollar.

The bank predicted that the “shilling is expected to stay stable around the levels of 2130/2170 in the days ahead”.

The shilling, on other hand was holding steadily since the beginning of last month trading around 2120/2160 a dollar but slightly lost its grip as the year ends.

CRDB said the local currency was “helped by a slowdown in demand for the US currency towards the end of the year.”

The shilling, according to Bank of Tanzania data opened the last month trading at 2,162/66 against the dollars and strengthened to 2,131/32 mid-month before collapsing to 2,159/21 of yesterday.

Since January to date the shilling has depreciated by almost 25 per cent to 2,131/32. The pick was in last two months after climbing to over 2,400/- a dollar.

The International Monetary Fund (IMF) termed the weakening as way of the shilling to find its new equilibrium after trading too strong last year.

“The shilling, which was assessed to be somewhat overvalued in 2014, is now closer to equilibrium,” the Washington-based lender said.

For other currencies, the shilling lost between 10 and 22 per cent since January.