Tanzania’s shilling has made an appreciable gain against major currencies traded here over the last two days, after hitting its lowest point ever at 1,850 units for the US dollar in October 2011.
For the last two days, the shilling has traded at an average of 1,555 units, compared to 1,585 units last week, a trend which currency dealers attributed to the tight monetary stand taken by the central bank.
In spite of this encouraging development on the currency market and bumper crop harvests across the country, Tanzania’s inflation rate still soars, largely due to volatility in world market prices for oil.
According to Standard Chartered Bank, increased demand of the shilling by multinational firms for settlement of their tax obligations to the government and payment of wages for local employees would still hold down the currency’s appreciation.
“Moderate level of volatility should be expected,” said a statement from the Bank.
A low demand for the dollar ahead of the end-of-year festive season, coupled with high rates in the money markets as investors settled their treasury bills obligations, had also helped the shilling to remain steady.
Meanwhile, the National Bureau of Statistics has reported that headline year-on-year inflation up to end of November 2011 rose to 19.2 percent from 17.9 percent for the year ended October 2011.
Monthly headline inflation for November 2011 shot up by 1.4 percent.
Tanzania’s economic growth during 2012 is forecast at 7.3 percent, up from 6.3 percent last year