Economy Finance Government Tanzania

Tanzania Shilling Gains Slightly Against U.S Dollar

Tanzania shilling gains against the dollar with steady inflows of the greenback. According to CRDB financial and market highlights, the increasing demand from the energy and manufacturing sectors however, may put some pressure on the local currency in the near future. The shilling closed at the levels of 2153/2193.

A tick up can be expected this week as withheld demand consolidates but sizable dollar flows could as well tame it if it enters the market. On Monday, the interbank money market volume was recorded at 34.8bn/- with the shilling exchanged at the levels of between 16.0 per cent and 13.0 per cent.

The overnight rates cooled off with volumes exchanged hands falling by nearly 20bn/- a sign of improving liquidity. In Uganda, the shilling weakened today due to increased dollar demand from commercial banks, traders said.

At 0910 GMT, commercial banks quoted the shilling at 3,460/3,470, from yesterday’s close of 3,440/3,450. “Demand for dollars has picked up among commercial banks and that has triggered a bit of pressure on the shilling,” said Faisal Bukenya, head of market making at Barclays Bank Uganda.

Traders broadly expect the shilling to hold steady around 3,450 in the days leading up to the presidential election on February 18 amid slow importer activity.

Meanwhile, South Africa’s rand weakened in early trade today, caught in the global sell-off with investors rushing to safe-haven assets as fears of a global economic slowdown weighed. Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.73 per cent.

At 0646 GMT the rand weakened 0.34 per cent to 16.1950 against the dollar, compared to where it closed in New York on Monday.

“Risk currencies have not escaped the rout,” said Rand Merchant Bank currency strategist John Cairns. “The rand has largely just followed the pack, although it has continued to sell-off this morning, even as everything else stabilises.

“‘ Growing fears over a global economic slowdown have spiralled into sharp weakness in risk assets, including the rand which prompted investors to also dump financial stocks.

With many Asian markets closed for the Lunar New Year holiday, thin conditions might have amplified trading moves, market participants said. Most markets in the region will re-open from Wednesday, with Chinese markets returning next week.

Government bonds were mostly weak in early trade, with the benchmark paper due in 2026 adding 0.5 basis points at 9.345 percent. In Kenya, the shilling was steady today, with subdued dollar inflows expected to keep the local currency trading within a tight range.

By 07.09 GMT, commercial banks quoted the shilling at 101.90/102.00 to the dollar, unchanged from yesterday’s close.”It’s very quiet. We expect the market to be rangebound, between 101.80-102,” said one Nairobi-based trader.

He added that dollar demand has been weak. The shilling has been stable this year after losing 11 percent against the dollar in 2015.

Source: AllAfrica

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