Tanzanias shilling fell for a seventh
week in the longest stretch of losses in
almost three years as declining
commodity exports led to a lack of
dollars in East Africas second-biggest
economy.
Inflows of U.S. currency dried up amid
lower agriculture earnings and fewer
tourists, according to Commercial Bank
of Africas Head of Money Markets
Hakim Sheikh. The value of coffee
exports fell 28 percent in March from a
month earlier, while tea dropped 4.3
percent and tobacco plummeted 75
percent, according to central bank
data. Tanzania has the widest external
current-account deficit in East Africa
after Burundi, the International
Monetary Fund said.
Theres a shortage of dollars in the
market because theres no inflow from
agriculture and tourism, Sheikh said
by phone from Dar es Salaam today.
Theres a big demand for dollars
coming from the oil companies and
construction sector.
The shilling has depreciated 0.7
percent in the past five days and is
East Africas worst performer this year,
falling 4.4 percent. It retreated 0.1
percent to 1,663 per dollar by 5:14
p.m. in Tanzanias commercial capital.
The currencys run of weekly losses is
the longest since an eight-week period
that ended in July 2011.
The nations external current-account
deficit is seen at 13.9 percent this year,
compared with the sub-Saharan African
average of 3.6 percent, according to
the IMF. Thats prompted the
government to cut spending in an
effort to meet a target of 5 percent, the
IMF said in a statement dated May 15.
The shilling appears to be somewhat
overvalued in real effective terms, the
IMF said.
Dollar inflows may pick up when the
agricultural harvesting and exporting
period happens from June to
November, while tourism peaks in the
second half of the year, Albert Ngusaru,
head of Treasury at FBME Bank Ltd.,
said by phone from Dar es Salaam.
In the first few months of the year
Tanzania does not have a lot of
inflows, he said. The economy is
highly dependent on flows from
agriculture and tourism.