THE shilling subsequently stabilized against the US dollars after gaining back 25 point in percentages (pips) in a week ending last Friday.
The shilling closed the week at a weighted average exchange rate of 2,300/50 against the greenback.
Orbit Securities, weekly synopsis report, said the shilling has been stable since mid-this year when foreign exchange liquidity stabilized in the banking sector.
“[ The stabilisation came] after the central bank intervened in the market to provide sufficient liquidity,” Orbit, a leading stock brokerage firm, said in a report.
The report showed that the liquidity is currently stable as the Central Bank is “mopping out excess liquidity from the banking sector while piling up foreign reserves.”
The firm said the Bank of Tanzania (BoT)’s move to mop out excess money in circulation “ate up a significant chunk of foreign reserves.”
However, Orbit said, BoT managed to recoup the foreign reserves to 5.4 months of imports at the end of July, surpassing the country’s benchmark of 4.0 months.
At the same time, foreign assets of banks amounted to 1,053.9 million US dollars at the end of July, higher than 895.2 million US dollars recorded a year earlier.
CRDB Bank said in its financial market highlights that the shilling and dollar have been in trade on similar levels in the past two weeks.
“Lack of volatility between the two [Tanzania and US] continues to be largely attributed to the supply of greenback into the economy that remains consistent as a result of agriculture and tourism sector,” CRDB said.
The Interbank Foreign Exchange Market (IFEM) began the month on a slow pace as the volumes traded declined by 14 per cent to record a weekly total of 40.32million US dollars from previous week’s 46.7million US dollars.