Tanzanian shilling in free-fall

BY GEOFFREY NANGAI

THE TANZANIAN shilling has depreciated to a record high with one US dollar ($) selling between 1702/- to 1725/- in many forex bureaus around Dar es Salaam as of yesterday.

The deprecation of the shilling has been fueled by importers appetite since many of the imports are purchased in dollars.

Economic analysts however urge that the Tanzanian shilling has depreciated due to soaring inflationary pressure, high demand, speculative trading and euro zone debt and fiscal woes that have made investors wary of risk.

Where as Central Banks in other East African Countries that include Uganda and Kenya have come up with financial reforms to save the situation, the Tanzanian Government has been adamant to rescue the battered currency.

Uganda’s Central bank has intervened by selling dollars to commercial banks and issuing a bond auction that has seen the country’s currency edge slightly against the dollar.

The Bank of Tanzania (BoT) Governor Professor Benno Ndulu during an interview with The African maintained that the Central Bank’s intervention at this time would however make matters worse.

“The situation is not alarming. We still have enough reserves in terms of forex in our treasury to take us through to the end of the year.

“The depreciation of the shilling should be a blessing to the exporters as it is their time to make super profits,” Ndulu said.

The depreciation of the shilling has however fueled the issue of dollarisation that has seen many traders across the country charge in terms of the dollar to take advantage of the situation.

One market player who spoke to The African yesterday on the condition of anonymity said the Tanzanian shilling will fall further because there is no mechanism in place to address the problem.

The Tanzanian shilling is tumbling in an open territory without borders. It's quite crazy because there is nothing to support the shilling at the moment," the source said.