Tanzanian finmin says shilling to stabilise on loan inflows

DAR ES SALAAM (Reuters) – Tanzania’s shilling is expected to stabilise in the next few days after it broke through a series of record lows against the dollar, the finance minister said.

The shilling has lost 15 percent of its value against the greenback this year, mainly due to a firmer dollar and lower prices of gold in global markets.

The currency of east Africa’s second largest economy traded the shilling at 1,988/1,998 per dollar having earlier exchanged at 2,010/2,020, its lowest level ever.

The shilling closed at 1,930/1,940 on Thursday last week.

“The depreciation of the shilling is expected to slow down in the days ahead as the government is finalising plans to receive at least $500 million from commercial loans before the end of the current fiscal budget,” Saada Mkuya Salum said in a presentation to parliament on Wednesday.

Foreign grants and loans are a major source of hard currency in Tanzania, Africa’s fourth-biggest gold producer, whose economy also relies on tourism earnings and agriculture.

“In the year ending January 2015, our gold export earnings fell by $334 million,” said Salum.

Traders said they expect the shilling to remain steady in the coming days and could weaken unless it gets support from the country’s central bank.

“The challenge is that there is demand (for dollars) coming from everywhere while there are no inflows,” said Mohamed Laseko, a dealer at CRDB Bank.

“The shilling could likely remain under pressure until June-July when we traditionally start seeing substantial U.S. dollar inflows from tourism and agriculture sectors.”