BAK
JF-Expert Member
- Feb 11, 2007
- 124,789
- 288,011
Wednesday, 26 October 2011 23:07
The Citizen Reporter
Dar es Salaam.
Central bank governor Benno Ndulu declined to comment on the sorry state of the shilling that continues to fall freely against the major foreign currencies, hitting another new low of Sh1,800 to a dollar at midday yesterday.
When he was contacted by The Citizen for comment on what the Bank of Tanzania (BoT) was doing to rescue the shilling, Prof Ndulu, a seasoned economist, said any word from him could negatively impact the movement of the currency.
I wont say anything about the shilling now because it would affect its market. Please bear with me about that for today.
I cant talk unofficially, said Prof Ndulu in a telephone interview yesterday.
He explained, however, that he would speak about the shilling crisis after he meets with both the minister for Finance and Economic Affairs and the parliamentary committee on the same docket tomorrow.
You know that Im supposed to meet the parliamentary committee about the same issue, he added.
The Finance and Economic Affairs minister, Mustafa Mkulo, also declined to comment on the situation when reached on his mobile phone, saying he was attending a meeting in Burundi. However, the chairman of the parliamentary committee on Finance and Economic Affairs, Dr Abdallah Kigoda, confirmed to The Citizen that his committee has summoned Prof Mkulo for an explanation on what the government was doing to deal with the high inflation and the shilling crisis.
We are meeting the BoT and the ministry of Finance and Economic Affairs to hear what they are doing concerning the rising double digit inflation and the free-falling shilling, said Dr Kigoda. Prof Ndulu accused the media (Mhhhh!....Shhhhh! Media...Please don't say anything about our currency in order to save it from further depreciation) of fuelling the shilling crisis by its constant reports on the issue.
The shilling reached a record low against the greenback yesterday, reaching Sh1,800 as a result of increased demand of the dollar.
At the National Microfinance Bank (NMB), the shilling extended losses against the dollar from Sh1,765 the previous day to Sh1,800 yesterday.
NMB treasury director Aziz Chacha said the shilling was weakening on account of underlying business demands for foreign currency. He dismissed the notion that banks may have contributed to the shilling crisis.
Export proceeds on the other hand are much muted. I dont think banks can cause this crisis because they transact on behalf of their customers within prudential guidelines from the central bank, said Mr Aziz.
The shilling crisis is extending at the time the BoT is implementing three recent policy decisions aimed at tightening liquidity and ensure availability of foreign currencies in the market to address rising inflation and bolster the shilling.
With the new BoT moves, commercial banks and some foreign exchange dealers were obliged to release some of the foreign currency they had as their capital reserve (net open exposure requirement) were reduced to 10 per cent from 20.
BoT also started reducing the supply of the shilling in the economy by taking in 10 per cent of the billions of shillings of government money, which is kept as deposit in commercial banks. The bank rate was raised to 9.58 per cent from 7.58 per cent.
However, experts and bankers criticised the policy measures, saying the actions would only work on the short-term basis.
The currency had gained as much as 0.6 per cent and traded at Sh1,685.5 against the dollar last Monday. It then reached Sh1,722.5 last Wednesday and lost further on Friday to trade at Sh1,733 against the dollar.
Things changed on Monday this week when the local currency hit a new, all-time low at Sh1,750 against the dollar despite last weeks central bank intervention to stop further depreciation. Reports from some commercial banks indicated that the markets closed at Sh1,755 during the same day.
The weakening of the currency for a sixth consecutive trading day after minimal gains early last week were attributed to increased demand of the foreign currency from importers, especially in the energy sector.
Bankers said they expect the weakening trend of the shilling to continue to the end of the year as importers of both raw materials and oil build their stocks and meet rising demand of fuel in the country. Some analysts have recently predicted the local currency to hit Sh2,000 per dollar in the near future. Others warned that the weak shilling and the growing inflation rate may take the country back to economic crisis
The Citizen Reporter
Dar es Salaam.
Central bank governor Benno Ndulu declined to comment on the sorry state of the shilling that continues to fall freely against the major foreign currencies, hitting another new low of Sh1,800 to a dollar at midday yesterday.
When he was contacted by The Citizen for comment on what the Bank of Tanzania (BoT) was doing to rescue the shilling, Prof Ndulu, a seasoned economist, said any word from him could negatively impact the movement of the currency.
I wont say anything about the shilling now because it would affect its market. Please bear with me about that for today.
I cant talk unofficially, said Prof Ndulu in a telephone interview yesterday.
He explained, however, that he would speak about the shilling crisis after he meets with both the minister for Finance and Economic Affairs and the parliamentary committee on the same docket tomorrow.
You know that Im supposed to meet the parliamentary committee about the same issue, he added.
The Finance and Economic Affairs minister, Mustafa Mkulo, also declined to comment on the situation when reached on his mobile phone, saying he was attending a meeting in Burundi. However, the chairman of the parliamentary committee on Finance and Economic Affairs, Dr Abdallah Kigoda, confirmed to The Citizen that his committee has summoned Prof Mkulo for an explanation on what the government was doing to deal with the high inflation and the shilling crisis.
We are meeting the BoT and the ministry of Finance and Economic Affairs to hear what they are doing concerning the rising double digit inflation and the free-falling shilling, said Dr Kigoda. Prof Ndulu accused the media (Mhhhh!....Shhhhh! Media...Please don't say anything about our currency in order to save it from further depreciation) of fuelling the shilling crisis by its constant reports on the issue.
The shilling reached a record low against the greenback yesterday, reaching Sh1,800 as a result of increased demand of the dollar.
At the National Microfinance Bank (NMB), the shilling extended losses against the dollar from Sh1,765 the previous day to Sh1,800 yesterday.
NMB treasury director Aziz Chacha said the shilling was weakening on account of underlying business demands for foreign currency. He dismissed the notion that banks may have contributed to the shilling crisis.
Export proceeds on the other hand are much muted. I dont think banks can cause this crisis because they transact on behalf of their customers within prudential guidelines from the central bank, said Mr Aziz.
The shilling crisis is extending at the time the BoT is implementing three recent policy decisions aimed at tightening liquidity and ensure availability of foreign currencies in the market to address rising inflation and bolster the shilling.
With the new BoT moves, commercial banks and some foreign exchange dealers were obliged to release some of the foreign currency they had as their capital reserve (net open exposure requirement) were reduced to 10 per cent from 20.
BoT also started reducing the supply of the shilling in the economy by taking in 10 per cent of the billions of shillings of government money, which is kept as deposit in commercial banks. The bank rate was raised to 9.58 per cent from 7.58 per cent.
However, experts and bankers criticised the policy measures, saying the actions would only work on the short-term basis.
The currency had gained as much as 0.6 per cent and traded at Sh1,685.5 against the dollar last Monday. It then reached Sh1,722.5 last Wednesday and lost further on Friday to trade at Sh1,733 against the dollar.
Things changed on Monday this week when the local currency hit a new, all-time low at Sh1,750 against the dollar despite last weeks central bank intervention to stop further depreciation. Reports from some commercial banks indicated that the markets closed at Sh1,755 during the same day.
The weakening of the currency for a sixth consecutive trading day after minimal gains early last week were attributed to increased demand of the foreign currency from importers, especially in the energy sector.
Bankers said they expect the weakening trend of the shilling to continue to the end of the year as importers of both raw materials and oil build their stocks and meet rising demand of fuel in the country. Some analysts have recently predicted the local currency to hit Sh2,000 per dollar in the near future. Others warned that the weak shilling and the growing inflation rate may take the country back to economic crisis
