The commercial banks quoted the shilling at between 1,575/- and 1,610/, the rate corporate firms were trying to push down to strengthen the local currency further. Standard Chartered said the market expected a stagnation trend to continue with a slight bias on stronger shilling, backed by increasing inflows and diminishing demand.
“The market is expected to remain slightly volatile,” Standard Chartered Bank said on its daily market report. The shilling had in recent days experienced relatively huge demand from imports, especially oil for electricity generation to bridge the deficit due to withdrawal of 350 megawatts from hydropower due to drought.
Earlier this week, Tanzania Electric Supply Company (TANESCO) said it was spending 5.2 million US dollars (about 8.3bn/-) daily to purchase diesel and heavy furnace oil to run its three oil power plants. That means the foreign exchange market has to spew out 5.2 million US dollars daily to cater for oil for electricity alone.
National Microfinance Bank said corporate clients were pushing for low rates on the hard currency, anticipating the firmer shilling. “But, as the market remains liquid, upside risk still holds incase of any significant demand,” NMB said on its e-newsletter.
Bank of Tanzania (BoT) shows in its monthly economic review of September that up to the year ending August, the value of import of goods and services was 12.9 billion US dollars, with oil imports alone eating 3.5 billion US dollars or 27.05 per cent of total bill.
Confederation of the Tanzania Industries (CTI) Director of Policy and Research Hussein Kamote said recently that revenues from agro-exports remain too insufficient to support the shilling due to bad weather.