Shilling under pressure due to strong demand for dollar, euro

“Corporates still show appetite to buy dollars, however the green back supply fell short in meeting the demand,” the NMB e-market report has stated.

Since Monday, there has been quite significant demand coming through from construction, manufacturing as well as oil and gas sectors which weighs heavily on the Shilling.

On Tuesday, the market closed at 2185/2245 levels.

However, the interbank money market is still liquid with overnight rates at 10.06 per cent.

The Confederation of Tanzania Industries (CTI) Director of Policy and Research Mr Hussein Kamote said the continued shilling depreciation will make imports expensive, thus affecting importers particularly of raw materials.

“With the shilling depreciation, importers buy less foreign exchange, therefore, imports become more expensive and exports are cheaper,” he said, while commenting on the impacts of the rising food prices to the economy.

He said the rising food prices combined with shilling depreciation could fuel up inflation that may discourage the current and potential investments flow into the country.

Also the rising food prices and shilling depreciation may erode people’s purchasing power on goods and services, thus affecting the whole economy.

Kenya’s shilling was steady on Wednesday, but was seen easing due to dollar demand from companies across various sectors like energy and manufacturing, traders said.

At 0755 GMT, commercial banks quoted the shilling at 104.00/10 to the dollar, the same as Tuesday’s close.

Ugandan shilling was broadly stable on Tuesday amid a sag in demand after firms used local currency holdings to settle mid-month taxes.

SOURCE: DAILY NEWS

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