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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Tanzania Central Bank helps defuse tension on
recent slide in shilling against major currencies

ARUSHA, Tanzania (Xinhua) -- The Bank of Tanzania (BoT) on Wednesday moved to clarify reasons behind recent depreciation of the Tanzanian shilling against the U.S. dollar, attributing it to a fall in foreign exchange earnings.

A statement released by the country’s central bank also sought to defuse tension against the backdrop of discussions in newspapers and social media, with fears that the shilling was in crisis due to foreign exchange reserves being inadequate.

"The Bank of Tanzania wishes to inform the public that the current movement in the exchange rate is a seasonal phenomenon related to low foreign exchange earnings from tourism and export crops," reads the statement in part.

BoT, the country’s finance sector regulator, said the depreciation of the shilling is a common trend that usually normalizes in the second half of the year when earnings from tourism and exports pick up.

"In addition, the U.S. dollar has recently been appreciating against major currencies.

"The Bank of Tanzania also wishes to inform the public that the country has adequate foreign exchange reserves, which are sufficient to cover 4.9 months of imports of goods and services," the statement intoned.

"It should be noted that exchange rate in Tanzania is determined in the market based on demand and supply of foreign exchange.

The BoT periodically participates in the market to smooth out volatilities in the exchange rate that are not in line with economic fundamentals."

BoT will continue to monitor developments in exchange rates with a view to ensure that participants in the foreign exchange market adhere to rules and regulations governing the market, the statement added.
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EARLIER REPORT:

Cyprus Central Bank says "vindicated" by Paris court decision on FBME

NICOSIA Cyprus (Xinhua) -- The Central Bank of Cyprus (CBC) feels vindicated and is completely satisfied by a decision by the Paris-based Arbitration Court which turned down an application by the owners of FBME bank claiming a compensation of 1.44 billion euros for the discontinuation of its operations, CBC spokeswoman Aliki Stylianou said on Thursday.

"The decision is proof of the correct and effective moves made by the management and the personnel of the Central Bank in handling the case," she said.

The statements by the spokeswoman were an indication of the magnitude of the relief the arbitration court’s decision brought to CBC and Cypriot government officials.

As the Cypriot Attorney General Costas Clerides pointed out, Cyprus was spared a large amount of money equaling about 7.2 percent of its Gross Domestic Product.

The arbitration started in 2014 after Lebanese brothers Ayoub-Farid Michel Saab and Fadi Michel Saab, who indirectly owned the bank, applied to the Arbitration Court seeking compensation from the Cypriot government for failing to protect their investment.

They cited a bilateral agreement between Cyprus and Lebanon for the protection of investments as the legal basis of their demands.

FBME, which was the holding company of FBME Bank incorporated in Tanzania, was set up in 2005 to provide ordinary banking business in Cyprus.

However, CBC revoked its license in 2013 after the USA Financial Crimes Enforcement Network accused FBME of facilitating financial transactions for multinational organized crime organizations and of becoming a channel for the financing of the Shiite Hezbollah group.

In December 2015, CBC also fined FBME 1.2 million euros for failing to comply with the anti-money laundering law.

FBME was consequently placed under administration and then under resolution by CBC, which in April 2016 also initiated proceedings for the compensation of bank clients who had guaranteed deposits of up to 100,000 euros.

Clerides welcomed the decision of the Arbitration Court, pointing out that it confirmed that "Cyprus Central Bank acted as a prudent supervisory authority and that the (Cyprus) Republic did not violate any of its obligations".

             

 

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