The shilling suffered again this week against the dollar after failing to recover the exchange rate ground it lost for eight consecutive weeks.
The exchange rate has fallen to the lowest levels so far this year during the period with the Bank of Tanzania (BOT) indicative rate for dollar buyers being above Tshs 1,650 the whole week.
Poor performance for the ninth week was also largely due to the limited supply of the greenback against its high demand by mostly oil importers and manufacturers.
The shilling hit the all-time low on October 28, 2011 when buying dollars reached over Sh 1,800 in some outlets. BOT’s indicative rates for buying and selling the US currency on that day were Sh 1,667 and Sh 1,692 respectively.
“The Tanzania shilling closed the week on a weaker footing, trading at 1,656/1,692, as market sentiment remained bearish of the local currency,” NMB Bank said in a market report on Friday.
“Sizeable demand from the manufacturing sector is seen putting pressure on the shilling well into next week, although a reversal is likely as we progress closer to the quarter-end, tax-payment period,” it added.
BOT’s indicative rates for buying and selling the greenback on Friday were Sh 1,640 and Sh 1,657 respectively. They were Sh 1,636 and Sh 1,652 last week and Sh 1,637 and Sh 1,654 on Monday.
Some banks had quoted it at Sh 1,621 and Sh 1,717 on Wednesday. Others had it at Sh 1,622 and Sh 1,718 on Thursday and Sh 1,620 and Sh 1,725 on Tuesday. In money shops, the highest buying rate was Sh 1,690 and the lowest Sh 1,675.
Exim Bank said in its foreign exchange and money market report that the current depreciation of the shilling against the dollar is temporary and that would be offset by earnings from the tourism season that starts this month.
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