SHILLING'S NEW TROUBLES TO HURT ECONOMY
The shilling once again performed poorly against
the dollar this week making it the seventh in a row. It is an unprecedented
stretch of losses in almost three years.
Bank of Tanzania (BoT) exchange rate data shows that
the weakening of the local currency is the longest since an eight-week period
between June and July 2011.
Its new troubles started on April 1 when BoT
indicative rates were Sh1,621 when buying dollars and Sh1,637 for every
greenback sold. A year back, the exchange rate was Sh1,582 and Sh1,598
respectively when buying and selling dollars.
Some treasury experts have attributed the latest
losses to declining foreign exchange earnings from export trade, which has
limited the supply of dollars in the economy. However, money markets have so
far remained calm with some foreign exchange traders saying there was no need
to panic because the trend is temporary.
“There’s a shortage of dollars in the market
because there’s no inflow from agriculture and tourism,” the head of money
markets at Commercial Bank of Africa, Mr Hakim Sheikh, told the influential US
business publication, Bloomberg. “There’s a big demand for dollars coming from
the oil companies and construction sector,” he added.
According to the Friday Bloomberg report, the
shilling depreciated by 0.7 per cent in the past five days and it is East
Africa’s worst performer this year, falling by 4.4 per cent.
“It retreated 0.1 per cent to Sh1,663 per dollar
by 5:14 p.m. (on Friday) in Tanzania’s commercial capital. The currency’s run
of weekly losses is the longest since an eight-week period that ended in July
2011.”
This week, BoT said the shilling depreciated
against the dollar by 0.5 per cent in March this year. That was after trading
at an average rate of Sh1,634.3 per dollar during the month compared with
Sh1,625.8 in February. Annually, it depreciated by 2.4 per cent from an average
of Sh1,594.4 per greenback in March 2013.
During the same one-year period, the value of
exports of goods and services declined by 1.7 per cent to $8,709.5 million. On
the other hand, exports went up from $12,909 million in March 2013 to $13,765
million in March 2014.
Source:
The Citizens Monday May 26, 2014