Shilling depreciates 3pc in seven weeks

By ABDUEL ELINAZA

PRESSURE on the shilling continues to mount as supply dwindled to depreciate by 3.0 per cent against US dollar in the last seven weeks.

The shilling opened the year trading at 2,175/39 but close the last Friday session at 2243/83 while pressure from importers was building up. The level of depreciation in the last seven weeks was similar for the amount the shilling lost for the whole of last year.
CRDB Bank said on its Financial Markets Highlights that the pressure on the shilling had eased after Central Bank intervention. “The local unit was still holding on at the 2240/60 levels,” the bank said last Friday.
However, the bank daily report warned on further pressure in demand from traders and importers, with insufficient supply to cater to this demand. “The expectation is to see the pressure ease up towards the end of the month,” the bank said, “due to local obligations to be met by various organisations in the market”.
NMB Bank early this year predicted on its Market Digest volume 8, that the shilling may face some pressure from importers and derailing its firmness due to limited inflow. “Importers are expected to come heavy to the market in Q1, 2018 with limited inflows could potentially push up the pair,” NMB said.
However, NMB said Bank of Tanzania’s “sporadic intervention” in the market will keep the pair buoyed. The shilling depreciation may also be the result of strong US dollar that rallied for the last 10 days to last Thursday in the global market. “The US dollar declined against most major currencies on Thursday after reaching 10-day highs in the earlier session,” CRDB said.
In the global market, the dollar index, which measures the greenback against six major peers, fell by 0.36 per cent at 89.726 in late trading. “The index rallied to 90.275 in the morning session on Thursday, the highest since the beginning of this month,” the bank report showed.