THE shilling has depreciated by 2.2 per cent in the past ten months maintaining resilience by holding strong against the US dollar, according to Bank of Tanzania foreign exchange data.
The local currency opened the year at 2,241/24 against a US dollar and closed trading yesterday at 2,29 0/49, the central bank data showed.
However, there are worries that the stability may not last longer and the local currency may soon yield to strong US dollar pressure due to reduced foreign currency inflows from cash crops.
CRDB Bank said in its Financial Market Highlights report although it has maintained its strong resistance levels against the US Dollar so far, the increase on the pressure may results in breaking the levels.
The bank also said “the pressure increases the risk of having the dollar break into new levels”. CRDB, the largest bank in term of assets and deposits said inflows from tourism and cash crops exports have been low this year.
“… With only the cashew nuts season remaining to rescue the shilling breaking the present resistance level,” the bank said. NIC Bank Tanzania acting Managing Director Mick Karima told the ‘Daily News’ earlier that import and export traders should take advantage of stable shilling to maximize business return.
“The shilling has been stable for the long time and this is good for business to make prediction of future return,” Mr Karima said. The shilling in the last three years has depreciated by 4 .8 per cent which, according to financial analysts, was insignificant fluctuation.
“The exchange impact is small to shift future return predictions,” an analyst told the ` Daily News’ yesterday. The shilling was selling at 2,185/08 in October 2015 which showing a depreciation of 105/- in three years to October this year.
TIB Corporate Bank said in its Market Update yesterday that the shilling fell slightly on demand from manufacturing and petroleum sectors. “The shilling is poised to continue falling unless a sizable inflow enters the market,” TIB said in the report.