Shilling stability continues in Q3

THE shilling remained stable in the third quarter of 2017, thanks to dollar inflows from exports of cash crops and Vodacom Tanzania initial public offering (IPO).

According to NMB market digest, it traded flat against the greenback in the quarter that ended September depreciating by only 0.3 per cent from 0.2 per cent in the previous quarter.

“The slight depreciation was on the back of demand for dollars from government spending and Vodacom IPO that outweighed cotton and coffee exports receipts,” read part of the report.

Market opened at 2,237/- in the quarter under review to trade at higher than 2,245/- and close at 2,244/- per dollar. Vodacom, the leading mobile telcom in Tanzania in terms of subscription, is the first mobile telecom operator to list at the bourse after a successful IPO mid this year.

It raised 476bn/- from local and foreign investors in the largest IPO in the history of capital markets, which was part of government-imposed requirement for all telecom companies to list at least 25 per cent of their shares locally.

Cashew is the second largest cash crop worthy about 340 million US dollars should the average price per tonne remain the same and has kicked off already in this quarter. The market still expects about 30 per cent of the tobacco season value to be auctioned in this quarter.

“This coupled with the expected slowed demand for dollars in the last quarter of the year will demand for a stable shilling to year end,” stated the report.

Similarly, during the period under review, money markets witnessed a significant increase in activities by 27.3 per cent on quarter to quarter from 455.01bn/- traded volumes in the previous quarter to 625.85bn/-in this quarter.

This is ascribed to improved liquidity mainly in big banks as a result of government spending and BoT taking less than the matured and offered amounts in government securities auctions. However, a higher volume of 2.31tri/- was recorded in the same quarter last year.

The interbank overnight rates demonstrated a declining trend having averaged at 4.33 per cent in this quarter from 6.22 per cent levels in the preceding quarter.

Overnight rates are projected to remain depressed as the Central Bank continues to focus on maintaining appropriate liquidity levels in the economy, while ensuring stability of money market rates.