Tanzania shilling hits all time low vs dollar

Fri May 20, 2011 9:32am GMT
 

By Fumbuka Ng'wanakilala

DAR ES SALAAM (Reuters) - The Tanzanian shilling weakened to an all-time low of 1,540 against the dollar on Friday as greenback demand from the energy sector piled pressure on the local currency.

At 0752 GMT, commercial banks quoted the shilling at 1,535/1,540 to the dollar, compared with 1,530/1,535 at Thursday's close. The shilling is trading past the previous low of 1,527, hit in May 2010.

"The all-time depreciation of the shilling has been largely caused by demand from the oil sector. The ongoing shortage of electricity in the country has significantly pushed up demand for fuel for power generation," said Hamisi Mwakibete, head of trading at Commercial Bank of Africa Tanzania.

"Oil companies also appear to have run low on stocks and are doing bulk importation of fuel, hence the strong demand for US dollars in the market. There is a pile up of demand from corporate customers at the moment," he said.

Earlier this week, Tanzania's state-run power company announced daily 16-hour power cuts for a week starting from Thursday due to an expected shortfall of up to 350 megawatts (MW) on the national grid.

Demand for dollars from oil importers has also contributed to declines in the Kenyan shilling this month.

Traders said the next level they were watching was 1,550. If breached, the focus would be on 1,600.

Traders attributed the weakening also to dollar buying by customers fearing that the shilling was going to lose even more ground in coming days.   Continued...

<p>A trader looks at his screen in the trading room of the Dar es Salaam Stock Exchange in Tanzania, January 11, 2010. REUTERS /Katrina Manson</p>

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