The money market experts said the dollar demand was mainly pushed up by corporates which failed to be supported by agriculture and other foreign revenue sources.The National Microfinance Bank (NMB) said the shilling set barriers and traded range bound similar to close of the business yesterday and last week but prospects look weak.
"The shilling is expected to weaken further this week, while dollar inflows in the market from agriculture and other traditional sources remain minimal," NMB said in the daily e-Market report.
The Standard Chartered Bank said the shilling traded relatively flat against the dollar yesterday as inflows matched outflows in the market. "We expect the trend to continue with a slight bias on a stronger dollar," the bank said, adding "volatility in the market is expected to be low."
Orbit Securities, Investment and Research Officer, Godfrey Gabriel said the shilling appreciated slightly to close the last month at mean rate of 1,567/- compared to the end of July figure of 1,574/-.Since January, the shilling has been trading at a steady range signifying that the monetary policy to reverse the free fall of the local currency about a year goes paid-off.
The shilling, according to the Bank of Tanzania (BoT), has been trading at between 1,573/- and 1,590/- for the US dollar, which is a better range-rate compared to the last September amount at 1,825/- a dollar while volatility is at the minimal level.
But money analysts agreed that the local currency cling steadily at the foreign exchange market, but said the amount is still high to subdue prices of imported goods and services."Yes, the shilling held firmly in the last eight months but still it is not favouring imports.
The higher the shilling the higher the prices of imported goods -the level should be at least below 1,200/-," a market analyst told the 'Daily News.' But the BoT has maintained that a balance should be strike between reasonable levels of exchange that will facilitate imports but as well as exports.