Africa-Press – Tanzania. THE Tanzanian shilling is on appreciating mode against the US dollars since the third week of last month, around the same time when International Monetary Fund (IMF) approved the 1.3tri/-Covid-19 relief fund to the country.
The shilling appreciated by almost 5/- at the start of this week and traded at a weighted average exchange rate of 2,306/- a greenback. The appreciation was the highest gain in three weeks recorded in recent year.
Orbit Securities said in its weekly Market Synopsis that the shilling appreciated by almost 5/-equals to 0.21 per cent against the US dollars since the third week of last month.
“The shilling began appreciating against the greenback in the third week of September, around the same time the IMF approved the 567million US dollars (1.3tri/-) concessional loan to Tanzania,” Orbit Securities said on Monday.
In its recent publication, the Bank of Tanzania (BoT) also gave the reason for the increased foreign currency to the availability of inflows from development partner such as IMF and World Bank among others.
“The reason for increase of exchange rate and appreciation of the shilling is attributed to be a reviving tourism sector, increased exports especially of gold and traditional exports as well as inflows from development partners such as the IMF and World Bank,” Orbit Securities quoted the central bank.
On a weekly basis, the shilling appreciated by more than 2/35 on the activities of the Interbank Foreign Exchange Market (IFEM)—equivalent to 0.1 per cent appreciation in a week.
Orbit said the total value of transactions on the IFEM during the week to last Friday was 22.38 million US dollars, which is 79.6 per cent lower, compared to the previous week.
“The first week of October started on a lower tone compared to the end of September,” Orbit said, adding “on a monthly basis, the amount traded in September was three times than that traded in August”.
The total amount traded in September was 157million US dollars, higher than 48.3 million US dollars traded in August.
Orbit Securities Head of Research and Analytics Imani Muhingo told Daily News that the boost on the shilling seen in the last few weeks is useful in the containment of the already rising inflation, seen at 4.0 per cent for the year ending September.
“Another positive impact is the relief of the government from domestic borrowing which is crucial in the government’s mission to lower interest rates in the economy,” Mr Muhingo said adding:
“A possible risk may arise from the increased burden of external debt which is prone to foreign exchange volatility. Efficient management of the funds is crucial to hedge against the risk, but also efforts to business oriented foreign inflows are another way.”
However, other experts believes that the IMF facility will not have a strong impact on the local currency, because huge portion goes to improve social services such as water, education and health sectors
Vertex International Securities said Advisory and Capital Market, Manager, Ahmed Nganya said the facility will have slight impact on shilling value.
“We do not think the facility will have a strong effect on our currency because a huge portion of the fund going out through imports of water and medical equipment,” Mr Nganya told the ‘Daily News’ on Monday.
At the end of August, the Foreign Reserve amounted to 5.8 billion US dollars enough to cover six months of imports.
Speaking at the official event to launch the nine-month ambitious Tanzania Covid -19 Social- Economic Recovery and Response Plan (TCRP) after receiving the IMF facility, President Samia Suluhu Hassan said the money is expected to revolutionise the country especially in education and health sectors and bring impact on the economy.
The Finance Minister Mwigulu Nchemba said the facility will help to decongesting students in schools through the construction of 15,000 classrooms for secondary and 3,000 for primary in the coming academic year.
“The classrooms will help to reduce chances of Covid-19 infection among students and pupils in classes, as they will be able to observe a social distancing,” he said.
Also some 462,765 desks will be bought for secondary and primary schools and complete the construction of six Vocational Education and Training Authority (VETA) colleges and 26 others which had not made any progress.
Besides, the credit financing will be used for the construction of lecture rooms in 17 teachers’ colleges and used for publishing 10,812 braille text books for students with the blind students.
In the case of the health sec- tor, the minister identified that 467bn/- has been set aside in the area of health including the construction of 72 intensive care units (ICU) from the current five ICUs valued at 54bn/-.
