Tanzania: Shilling Remains Strong During Christmas

THE shilling held strong against the greenback in the week to Christmas while the volume of

transactions in the foreign market grew more than two folds.

This was good news for Christmas shoppers as prices of goods and services remained within the equilibrium range towards end of the year.

The shilling, during the week to Christmas, attained an appreciation of 0.024 per cent, equivalent to 55 pips.

Orbit Securities said the shilling closed the week at a weighted average exchange rate of 2,299/90 against a US dollar prior to Christmas compared to 2,300/45 per US dollar at end of the previous week.

"The shilling has been gaining momentum since mid-November, as we approached the festive season hence the demand for the shilling increased along with tourism inflows," Orbit said in this week market synopsis.

The leading brokerage firm said value of transactions that went through the Interbank Foreign Exchange Market (IFEM) during the week grew to 58.37million US dollars from last week's 20.86milion US dollars.

On money markets, Orbit Securities said it recorded way more activities, "marking the busiest week of the month yet". "Value of transactions in the Interbank Money Market (IMM) was more than three folds that of the previous week," the report showed.

The total value of transactions was almost four-time high after reached 100.4billion US compared to 29.6billion US dollars in previous week.

The weighted average interbank rate closed the week at 3.47 per cent which is a gain of 2.0bps week on week but somewhat a relaxation from 3.76 per cent during the beginning of the week, specifically Monday.

Bank of Tanzania (BoT) said in its monthly November economic review that the "activities in the financial markets were active", characterized by increase in supply of both shilling and foreign exchange liquidity, partly linked to accommodative monetary policy, seasonal increase in export proceeds particularly from tourism and crop exports.

"As a result", the report said "the performance of government securities auctions improved, interest rates generally fell, exchange rate stabilised".