Shilling: At The Mercy Of Global Risk Sentiment

Like its counterparts in Kenya and Uganda, the Tanzanian shilling has seen a sharp sell-off against the US dollar in recent weeks, smashing through its global financial crisis low to trade at TZS1,527/US$ on May 27. Although the unit has reversed some of these losses, trading at TZS1,453/US$ at the time of writing, we believe that further short-term weakness is on the cards. From a technical perspective, a move back towards TZS1,500/US$ looks likely. A break of this level would set the shilling up for a move to support at TZS1,530/US$. Failure for this to hold would be an extremely bearish technical signal and could presage losses all the way to multi-year support at TZS1,600/US$ over the longer term.

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