TANZANIAN shilling
is one of the stable currencies in Africa in a year-to-date and tipped
to
strengthen further on the back of new cashew nut season.
The shilling is on
number five after it registered a negative spot return of 0.12 per cent
since last October, according to Bloomberg's World Currency Ranker.
The shilling was
behind Djiboutian franc that slipped by 0.01, followed by Malawian
Kwacha that registered 0.79 per cent positive spot return.
The report, ranking
currencies in a real time, showed that Nigerian naira was second best
currency in Africa after posting a positive spot return of 1.08 per
cent.
The best currency was Egyptian pound that registered a spot appreciatiof 10.78 per cent year-to-yesterday.
The Bank of
Tanzania (BoT), Research Department Manager, Dr Nicas Yabu said
stability of the shilling is better for foreign direct investments due
to currency certainty.
"Also, importers
are certainly that whatever they order will reach them without any
loss," Dr Yabu told Business Standard yesterday.
Economically, less
volatile currency means stable foreign liquidity in the banking sector
especially in Tanzania where there is growing foreign capital
expenditure to feed numerous infrastructure projects undertaken by the
government.
Orbit Securities,
Market Analyst, Imani Muhingo, said stable currency on portfolio
investment and stocks reduces the country risk which lower discount rate
when foreigners consider Tanzania as an investment destination.
"Considering a low and stable inflation [plus stable currency], the real
returns should be stable as well.
"And with stable
currency and inflation, the risk of real returns fluctuations is very
minimal," Mr Muhingo told Business Standard yesterday.
For instance, if a
stock that pays 10 per cent dividend yield, the real return is 6.48 per
cent net of currency depreciation and inflation.
The discount rate
referred is in the analysis of the cost of capital for specified
investment avenue, different from the discount rate set by the Bank of
Tanzania.
An
economist-cum-banker, Dr Hildebrand Shayo, said effective supervision
and implementation of monetary policies implemented by the central bank
helped to stabilize the Tanzanian currency.
"To maintain the
stability the government has been taking a number of initiatives"
including promotion on the increase of local production of goods and
services as well as increasing exports to regional and international
destinations, Dr Shayo, who works for TIB Development Bank, said.
CRDB weekly
financial market highlights projected the shilling will stabilize
further as Tanzania enters cashew nut season next month.
"We anticipate appreciation of the local currency on the back of the cashewnut season," CRDB report showed.
In East African
Community region, Tanzanian shilling was the best performer followed
immediately by Ugandan shilling that depreciated by 0.15 per cent on the
sixth position. Kenyan currency registered a negative 1.63 per cent to
be on eleventh spot in Africa while Rwandan franc posted a 3.81 per cent
and on 14th position out of the basket of 20 best African currencies.
The worst performer
currency was Angolan kwanza that lost 34.97 per cent in year-to-date.
Yesterday, Tanzanian shilling was trading at 2,301/41 a dollar down from
2,365/- in March.
The Egyptian
currency appreciated from17.94 pound at the beginning of the year to
16.31 pound a dollar. Nigeria Naira was trading at almost same level
since January.
The naira depreciated from 364.99 in January to 361.79 yesterday.
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