The market closed at 1,588/1,596 for the US dollar which is about two shillings high against the US currency, according to the National Microfinance Bank. “The local currency edged high against the dollar on Thursday on the back of tight liquidity stance and quarter-end tax outflows,” NMB said in its e-market report over the weekend.
Standard Chartered Bank said the shilling saw slight appreciation against the greenback on the back of increased dollar inflows for tax and salary payment reasons. Economists have it that despite the shilling's relative stability market it is still volatile.
“The exchange rate is still bad (and) not good for the economy. The current shilling exchange rate is like a patient who is critically ill but in stable condition,” said Dr Honest Ngowi of Mzumbe University’s Dar es Salaam Business School.
The seasoned economist added “though it’s not easy to predict nor to target the exchange rate, the rates are still higher compared to 1,300/- or 1,400/- or even 1,500/- levels of the previous years...but, the lower the better.”
While the shilling gained some ground, the interbank was quoting between 15-23 per cent for overnight funds as investors settled their T-bills obligations and quarter-end taxes. “We expect after the quarter-end the market will regain some liquidity and see an easing on the overnight rates,” Standard Chartered Bank said, adding “…most of the banks looking for liquidity while few maintained their offers to the market.”