DSE stable despite shilling's fluctuation
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FLUCTUATION of the shilling has little
impact on the performance of the Dar es Salaam Stock Exchange (DSE)
because its influence on the economy is marginal.
Figure shows the shilling since January
has been fluctuating, but the Tanzania Share Index went up by
The DSE Chief Executive Officer, Mr Moremi Marwa. |
The DSE Chief Executive Officer, Mr
Moremi Marwa, said that foreign investors are buying shares of between
0.5 and 1.0 million US dollars which has little effect on the bourse.
"We don't see direct relationship
between exchange market and bourse's indices," Mr Marwa told the 'Daily
News', because types of activities in participation have different
motives. The CEO said investors are not selling dollars/shillings to
invest in shares.
"We are seeing significant impact when
budget support fund is pouring in and during traditional crops exports
seasons but not on exchange market," Mr Marwa said.
In developed markets the exchange rates
have significant impact on indices due to big number of foreign
investors who are reacting with the exchange movements.
"We (DSE) are yet to reach there," he
said, adding developed markets react on inflation, GDP and exchange
rates (but not the Dar bourse).
The Orbit Securities, Head of Dealings
and Operations, Mr Juventus Simon, said the bourse could react
significantly if the level of foreign investors is high. "Shilling
volatility could have a meaningful impact on the bourse should the
demand to buy shares from outside soars ..but it's still not that high,"
Mr Simon said.
He said the situation may be reached
when the DSE expands to become the barometer of the economy. Analysts
have it that the shilling fluctuation would have a consequential impact
when the capital account restriction is lifted thus allowing more
portfolio investors from overseas.
The investors when buying shares or
government securities will pump more foreign exchange but drained the
foreign reserves when selling their shares and want their money home.
As of now the capital account is
substantially controlled, but Bank of Tanzania (BoT) has developed a
plan for the gradual lifting of capital controls by 2015.
Source: Daily news
Source: Daily news