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Tanzania currency hits all time low

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 DAR ES SALAAM, TANZANIA - The Tanzania Shilling depreciation has reached an all time low since independence some 50 years ago, but the Bank of Tanzania (BoT) says it has no plans to intervene.
 The BoT has attributed the free fall mainly to the strengthening of US dollar at international level, and the demand and supply following increasing oil prices due to Arab world unrest.
 The Tanzania Shilling, though opened the year on the stronger note, began losing ground rapidly at the end of last month to trade last between Tshs 1,510 and Tshs 1,520 per US dollar in the bureaux de change. The BoT official rate indicates that the Shilling has depreciated by almost 3.0 % from 1,440/45 to 1,481/74 per US dollar of mid last week. The local currency also lost ground to other stronger currencies at Tshs 2,378/48 from 2,239/04 per UK pound, while the Euro exchanged at Tshs 2,063/02 from 1,914/93 per Euro currency.
The BoT Director for Economic Research and Policy, Dr Joe Masawe, admitted last week that the shilling slid in the recently past, but the "situation is not on the alarming tone."  
 The depreciation "is purely on demand side" following the increasing oil bill as prices went up due to middle east unrest, Dr Masawe said.
 He said the demand for the US dollar increased rapidly because the demand for dollar increased but stressed the Central Bank had no plans to intervene in the foreign exchange market. "BoT only intervenes when the market is distorting the exchange rates (due to speculation)," the Director said.
 He added, "to intervene now will not paint the true exchange vale of the shilling, and that is not proper… The shilling is currently trading at the true value as the demand exceeds supply."
 An economist with the Confederation of Tanzania Industries (CTI), Hussein Kamote, said the Shilling is currently compounded with a number of factors that dragged down its exchange power.
 "The costs of importing oil and productions have gone up in recently days," adding that some manufacturers are forced to use thermal power to which is expensive which adds insult to the already rising power bills and power rationing.
 Early this year, BoT Governor Prof. Benno Ndulu said the shilling's depreciation should not always be looked as a bad thing as it helps the country to export more.
 "I know importers will feel the pitch, but we have to balance the two to reach a level where we will not harm the economy," Prof Ndulu remarked.
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