The shilling has in the past five days traded at between Sh1,835 and Sh1,900 against the dollar, casting a bleak shadow on a country that relies heavily on imports to drive the economy.
Following the freefall, Bloomberg newswire named the Tanzania shilling the second-worst performer against the dollar after Nigeria’s naira
Dar es Salaam. The shilling has tumbled to a record low, with analysts and dealers predicting a freefall that could see the local currency trade at an average of Sh 2,000 against the dollar during the campaign period.
The shilling weakened further this week, trading at Sh1,900 to the dollar--down from Sh1,820 recorded last month.
Following the freefall, Bloomberg newswire named the Tanzania shilling the second-worst performer against the dollar after Nigeria’s naira.
According to a survey by The Citizen, the shilling has in the past five days traded at between Sh1,835 and Sh1,900 against the dollar, casting a bleak shadow on a country that relies heavily on imports to drive the economy. Though the weak shilling is a blessing for exporters, it is a big blow for a country that imports virtually everything.
Random surveys show that currency dealers, including commercial banks and the bureaux de change, are exchanging the dollar for Sh1,835 to Sh1,900 in the wake of rising demand from importers of oil in particular.
The shilling was trading at Sh1,550 to Sh1,660 in January last year but dropped to Sh1,900 at the beginning of this month. Between January last year and February this year, the shilling has lost its value against the dollar by 17 percent--the highest in two decades.
But the reasons dealers give for this state of affairs leave in limbo the man on the street, whose livelihood will be deeply affected by the weakening shilling.
To curb the impact of the tumbling shilling, importers always pass the burden to the final user--the man/woman on the street.
This means prices will surge dramatically this year as importers seek to rein in losses resulting from the weak shilling.
What dealers, analysts say
December-February is the tourism low season while imports come at high cost. “The local currency will obviously fall,” says Mr Hamis Mwakibete, head of trading at the Commercial Bank of Africa.
Tourism is Tanzania’s largest foreign exchange earner and brought in $1.95 billion last year, according to a Bank of Tanzania (BoT) report. In reality, though, half of the billions from the tourism sector do not come to the country as major tour operators market and sell their package globally.
Source: The Citizen
