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Shilling nose-dives to 1,610 against dollar

 

The shilling had remained firm since the first day of this year but started to tumble mid last week as oil importers made a come back from a prolonged year-end holiday season. At Monday market, the shilling weakened by almost 10/- from 1,600/- at the close of last week.

Standard Chartered Bank said yesterday in its “Daily Market” report that the local currency might go down further if the central bank intervened in the market. “If the BoT will be in the market today (yesterday) we then expect a more measured depreciation of the local unit - low to moderate level of volatility should be expected,” the bank predicted.

According to Bank of Tanzania (BoT) interbank foreign exchange market report, on Monday the amount traded rose slightly to 6.35 million US dollar compared to 6.26 million US dollar of the previous market. However, the said amount was not the highest in this month compared to 16million US dollar traded last Wednesday when the exchange rate hit the all time high since the beginning of this year of 1,614 per greenback.

The last week’s amount was the highest since last September 28, when the market traded 21 million US dollar, pushing the exchange rate at almost 1,700/- a  dollar. The local currency though appreciated handsomely in the last four months from last October, hitting 1,870/- the highest level since inception of the shilling in June 1966, bankers believes that the  level is low as market players are not fully recovered from end-year long holidays.

Meanwhile, BoT has reduced by over 50 per cent the amount it need to raise from five-year Treasury bond, which is scheduled for the auction today. The amount was cut to 25bn/- from 40bn/-. “It remains to be seen as a positive sentiment,” standard Chartered Bank said “we expect over subscription and cut-off at 18 per cent.”

The bank’s prediction is based on the fact that most trading books will be targeting the bond to add on some risk. “We expect secondary market to start picking up leading up to this week 5 year bond auction  results,” the bank said. At the end of last year the central bank cancelled two auctions of five-year bonds due to disagreement with bids from investors who wanted yields that averted the inflation risks. The inflation, stands at 19.8 per cent.

TANZANIA and Kenya are projected to ...

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Author: ABDUEL ELINAZA

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