The Tanzania shilling firmed marginally against the dollar in the week to Wednesday, amid increased demand from the telecoms and energy sectors, buoyed by Central Bank intervention.
Yesterday, the shilling traded at 1,247/1,257 to the dollar, compared with last Wednesday’s close of 1,250/1,258, dealers said.
During the week, the shilling weakened to levels of 1,255/1,265, but Bank of Tanzania (BOT) came to the market to sell the dollar at 1,250 shillings.
’’There was high demand for the dollar, especially from the telecoms and the oil sector.
The demand could not match the supply,’’ said Rose Mollel, a senior dealer at CRDB Bank.
Dealers said BOT intervened three times during the week.
’’This has been result of central bank coming to the market and selling dollars at very low prices different from the market rate,’’ said Samwuel Marco, a dealer at Stanbic Bank.
Dealers said they expect the shilling to continue gaining against the dollar, boosted by BOT’s continued presence in the market, and by corporate clients selling dollars to meet their shilling-denominated end-month payments.
Meanwhile, the Ugandan shilling weakened against the dollar, undermined by increased dollar demand from banks and corporate clients, but central bank intervention prevented further losses.
At 1100 GMT commercial banks quoted the shilling at 1,848/1,853 to the dollar, compared with 1,835/1,840 at last Wednesday’s close.
’’We have seen the shilling slide lower against the dollar due to increased corporate demand mainly from the telecommunication sector and the interbank market,’’ Catherine Kijjaggulwi, a dealer at Barclays Bank, said.
Dealers said the central bank intervened on Monday and Wednesday, putting brakes on the shilling’s weakening.
’’The central bank has intervened on the sale side mainly to smoothen out depreciation of the shilling,’’ said David Bagambe, chief dealer at DFCU Bank.
Dealers forecast the shilling will continue to depreciate in the absence of central bank intervention to close the week at 1,855 levels.
’’Anticipated end-month inflows are too weak to meet the surge in dollar demand in the market.
Unless the central bank intervenes with substantial amounts to prop the shilling, the market will continue to see it slide,’’ Bagambe said.
