The Tanzanian shilling has strengthened by 0.06 per cent against a US dollar to close the week at 2,276/56 on back of agriculture exports. However, it seems the stability may not last longer following an increase in oil prices during the previous week.
According to analysts, it indicates that there will more likely than not be a domino effect within the market. Orbit Securities said in a report that the shilling stability was backed by foreign inflows from ongoing crop buying season.
“… Foreign exchange continues to flow into the country for crops buying season,” Orbit said in its weekly synopsis yesterday. CRDB Bank said in the previous week there were high demands of the greenback from the oil marketing companies, manufacturing as well as trading sectors.
“The supply of the dollar continued to come from agriculture, tourism as well as the mining sector,” the bank said. The leading bank in terms of network and balance sheet said the high oil prices was likely to be faced by oil marketing companies an adverse impact due to high costs of oil importation.
“…This will result in a spike in transportation costs which will affect the manufacturing and tourism sector, to name a few. “As a result of this domino effect we are expected to see activity within the market, with respect to the greenback prices over the next few weeks,” CRDB said in daily market highlights report.
Another bank TIB Corporate said the local currency remained fairly stable last week with limited dollar demand from importers as they were paying month end regulatory obligations. “Dollar inflows from agricultural sector also offered support to the local currency.
“The shilling is likely to depreciate during the week should dollar demand surpass inflows,” TIB said in a report. The volume transacted dur-ing the week increased three-fold to 59.35million US dollars from preceding week’s 20.05million US dollars.
The Kenyan shilling weakened against the dollar yesterdaydue to excess liquidity inthe money markets and demand from merchandise importers, traderssaid. The commercial banks quoted the shilling at 100.90/101.00 per dollar yester-morning compared with 100.65/85 at Friday’sclose.
The weighted average interbank lending rate was quoted at4.8646 percent on Friday, down from 5.4492 during the previous session.
Also the Ugandan shilling has strengthened yesterday helped by commercial banks selling offdollars, traders said.
By yesterday morning commercial banks quoted the shilling at 3,795/3,805, stronger than Friday’s close of 3,825/3,835.