Shilling depreciates by 0.3pc in four years

The shilling has barely depreciated by an annual average of 0.3 per cent over the last four years.

The shilling managed to hold well thanks to the diversification sources of foreign inflows, from manufacturing, and tourism to agri-products.

Alpha Capital, Head of Research and Financial Analytics, Imani Muhingo, told ‘Daily News’ that the shilling held steadily for the last four years because of sound sources of forex inflows almost throughout the year.

“Tanzania has well-diversified sources of foreign inflows while the shilling has barely depreciated by an annual average of 0.3 per cent over the last four years,” Mr Muhingo said.

According to Bloomberg Terminal, the ‘best spot returns’ last year were the Guinea Franc (7.67 per cent), Somali Shilling (1.77 per cent), Mozambique New Metical (0.37 per cent), Djibouti Franc (-0.08 per cent), Tanzania Shilling (-1.05 per cent), Congolese Franc (-1.13 per cent) and Rwanda Franc (-3.87 per cent) were the strongest currencies.

The shilling, year-to-date, has merely depreciated by 0.043per cent to 2,321/40 against the US dollars thus making the local currency one of the strongest fiat money in the continent as far as the fluctuating range is concerned.

Bank of Tanzania (BoT) said the shilling remained stable against currencies of major trading partners consistent with a moderate inflation rate, trading at an average rate of 2,320/64 per US dollar last month, compared with 2,320/23 per US dollar in the preceding month.

“On an annual basis, the shilling depreciated by 0.5 per cent” from 2,309/23 per US dollar last January, BoT’s Monthly Economic Review of February showed.

NMB Bank said in its bi-weekly e-market publication yesterday that the shilling slightly lost its footing against the greenback in Monday’s trading session.

“We observed thin inflows from NGOs, mining and agri sectors against the existing and outstanding demand from oil market companies, manufacturing, agri products importers and SMEs,” NMB, one of the largest banks in the country, said.

The market halted at 2,339/2,379 levels on Monday.

The worst spot returns currencies in Africa were the Kenyan shilling (-8.32 per cent), The Gambian dalasi (-15.28 per cent), the Malawian kwacha (-20.51), the New Sudanese pound (-22.87 per cent), the Egyptian pound (-36.46 per cent), Ghana cedi (-38.36 per cent) and Sierra Leone (-40.58 per cent).

According to New World Economics, a currency is stable when its value doesn’t change significantly over time. Various factors contribute to stability, such as economic policies, inflation, interest rates, and even trust.