Shilling: Fundamentals Suggest Modest Gains In 2010

The Tanzanian shilling remains rangebound, having traded between TZS1,345/US$ and TZS1,280/US$ since February 2009. The bounds of this range represent key technical levels, with a break below TZS1,345/US$ setting up a move toward TZS1,400/US$ while a move above TZS1,280/US$ could see the unit moving towards the TZS1,220/US$ area. Although a shift out of this range would be a telling technical signal, we believe that this possibility remains remote in the short term, and we expect continued range trading. The Tanzanian shilling has been far less susceptible to global market volatility than its regional peers meaning that a spike in either risk aversion or risk appetite is unlikely to shift the Tanzanian unit significantly.

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