Bloomberg News

Tanzania Shilling Slips Most in 10 Months; Companies Buy Dollars

October 31, 2011

Oct. 31 (Bloomberg) -- Tanzania’s shilling retreated the most in 10 months against the dollar and was the world’s worst- performing currency today as commercial banks purchased the greenback.

The currency of East Africa’s second-biggest economy fell as much as 5.5 percent, the most since Dec. 21, to 1,740 per dollar and traded down 4.5 percent at 1,725 by 2:37 p.m. in Dar es Salaam, the commercial capital, the biggest drop among more than 17 currencies monitored by Bloomberg. The shilling is trading at the weakest since June 1994, when the government liberalized the currency market, according to Yonoh Mtengule, the chief economist at Absa Group Ltd.’s local unit.

“It is banks that have been buying dollars today mainly,” Fred Siwale, a dealer with Cooperative Rural Development Bank Plc, said by phone today from Dar es Salaam. “So it is really the inter-bank market moving the currency today.”

The shilling surged 9.1 percent, the most since 1999, on Oct. 28 after the central bank sold dollars to support the local currency. Tanzania’s inflation rate climbed to 16.8 percent in September on higher energy and food costs, the National Bureau of Statistics said Oct. 15.

The central bank is confident that measures taken to strengthen the shilling will have a positive impact, Bank of Tanzania Deputy Governor Lila Mkila told reporters today in Dar es Salaam. The nation may still achieve its target of 5 percent inflation by June 2012, Mkila said.

--Editors: Ana Monteiro, Digby Lidstone

To contact the reporter on this story: David Malingha Doya in Dar es Salaam at via Nairobi at pmrichardson@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net -0- Oct/31/2011 11:51 GMT


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