- Published on Thursday, 21 June 2012 01:55
- Written by ABDUEL ELINAZA
- Hits: 903
THE shilling is expected to continue firming up against US dollar backed by exports mainly cotton and tobacco.
Experts have it that the shilling gains started at the beginning of this year and maintain the rate of 1,600/- per the greenback. It is likely gain further to 1,550/- levels.
Standard Chartered Bank said in its daily market report that the shilling positive reception was backed by matched flows in the interbank as well as corporate markets.
"As we head towards end of second quarter and the start of harvesting for both tobacco and cotton, we expect the shilling to continue its gradual appreciation against the US dollar," the bank said.
According to Bank of Tanzania (BoT) the shilling opened the year trading at 1,581/84 against a dollar and only to fall to 1,600/- in February when it reached 1,605/-. The BoT April's Monthly Economic Review shows value of export of goods and services was 7.02 billion US dollars compared to 6.24 billion US dollars recorded during the year ended April last year.
"Traditional exports declined 3.6 per cent to 678 million US dollars mainly due to a decline in export volumes of coffee and cashew nut as well as export unit price of tobacco," BoT report issued in May shows.
But while the bank predicted strengthening of the shilling on the back of cotton sector, a price war is looming after farmers started opposing this year's indicative price of 450/- per kilogramme. Members of Parliament from cotton growing in Lake Zone have said categorically that they will not settle for any price except of 1,000/- per kg in this season that starts next month.
Cotton production in Tanzania, East Africa's biggest producer, may climb in 2012-13 for a second successive season after the country introduced contract farming and on improved weather, the Cotton Board of Tanzania (CBT) said. According to CBT cotton production in 2011-12 is estimated to be 38 per cent more than last season's crop of 163,000 tonnes due to favourable weather conditions and implementation of contract farming.
Tanzania exports at least 70 per cent of its annual crop mainly to the UK, Switzerland, Belgium, Malaysia, Singapore, the United Arab Emirates, China and Kenya, according to the board. The nation plans to boost domestic consumption of the crop to 51 per cent in three years, according to CBT website.