THE shilling has remained stable despite increased pressure on the US dollar. The National Microfinance Bank (NMB) said the shilling is expected to be under pressure this week if demand on the greenback persists.
The local currency indicative rates show that the shilling traded at between 1620 and 1640 for a US dollar, 2,247 and 2,278 for a Euro and around 2,694 to 2,731 for the British Pound.
The Standard Chartered Bank Daily Market Commentary shows that the USD/TZS traded relatively flat at the beginning of the week as inflows matched outflows in the market.
“The same trend it is expected in the coming days with a slight bias on a stronger shilling as demand for dollar eases off. Low price volatility was expected in the market yesterday,” stated the report.
The Mzumbe University lecturer Dr Honest Ngowi said the government move to export surplus crops will definitely have huge impact on the shilling, because it will lead to inflows thus easing demand for the foreign currencies.
“The decision to lift export ban will play a key role not only on the economy but also to the shilling as it would ease demand for the US dollars, which at most times has been weakening the local currency,” he noted.
He said also that by having bumper harvest it implies ending food imports which have been using substantial amount of US dollars while exerting pressure on the shilling.
However, he noted that the situation would be sustainable only if there is substantial volume of food exports. The Barclays weekly Market report shows the USD gradually appreciated against the local currency as increased demand for the dollar was seen from importers.
By mid week, the pair reached 1637 levels but leveled out to 1635 at the end of the week.