The shilling has been gathering strength for three consecutive weeks with slight appreciation against the US dollar, thanks to inflows from agriculture and charities.
The local unit gained one percentage in point (pip) on Interbank Foreign Exchange Market (IFEM) and started a week at a weighted average exchange rate of 2,309/09 against a greenback.
Orbit Securities said in its weekly Market Synopsis that the shilling held strong for the past three weeks albeit with slight gains.
“For three consecutive weeks, the shilling has been gathering strength with slight appreciation against the greenback,” Orbit said.
The total value of transactions during the week at IFEM totaled 8.3 million US dollars, compared to 7.4 million US dollars traded during the previous week.
NMB Bank said on its e-Market that on daily basis the pair, shilling and dollar, opened the week by traded range bound.
“The USD/TZS pair traded range bound on Monday as dollar inflows from agriculture and charities offered support for the shilling,” NMB said.
The lender, one of the largest, said demand was seen coming from oil marketing companies, telecom and manufacturers as they take advantage of improving dollar inflows towards the month end.
Also analysts have been projecting that the local currency to maintain its stability against the greenback in this quarter, backed by agricultural inflows which are expected to match with demand.
The stability, according to some analysts, was based on the fact that the economy is at the start of most cash crops seasons- which has supported the shilling dearly.
Also, the central bank’s active and strategic participation at the foreign exchange market to maintain orderly market amplified the stability.
According to NMB latest Market Digest, the shilling in quarter two traded sideways with limited volatility, thanks to tightness in foreign currency liquidity.
“Looking ahead to the upcoming quarter, the expectation is for further currency stability...,” the NMB report showed.
The report cemented its expectation from inflows that continue to come in from cotton, coffee and tobacco and expected to match the demand from importers.
Also “the central bank continues to actively participate in the market to maintain orderly market conditions,” the report said.
