Business

Kwacha signs strong stance in short-term

KAWELA MULENGA, ESTHER MSETEKA, Lusaka
MOST financial market players predicts the Kwacha not to exceed the K10.00 mark in the short-term but only if demand remain weak.
First National Bank (FNB) Zanaco and Cavmont Bank expect the Kwacha to be bullish in the short-term on account of strong demand of the local unit.
According to FNB’s daily newsletter, potentially this week offers more scope for bigger moves of the local unit compared to last week when the Kwacha was characterised by low volumes keeping the exchange rate in a very tight band in the middle of K9.90 and K10.00.
“Supply generally takes a boost from tax payment conversions with the deadline having passed, we will see a reduction in supply,” FNB says.
However, the bank notes the demand-supply imbalances may cause the rate to break out of its recent stranglehold.
Similarly, Zanaco says the Kwacha is expected to keep within a narrow range in the near term floating between K9.90 and K10.00.
On Friday, the Kwacha strengthened slightly against the greenback, aided by healthy dollar inflows from the corporates.
“The local unit opened for trading at K9.90/K9.95 unchanged from Thursday’s close. The Kwacha later touched an intraday high of K9.88/K9.93 before a slight surge in demand from the corporates which saw the currency pair close at K9.89/K9.94 on the bid and offer respectively,” Zanaco notes in its daily newsletter yesterday.
Analysing the foreign currency market, Cavmont Bank also says the local unit is likely to remain bullish in the short term should demand remain weak.
In Friday’s trading, the market saw the local currency appreciate by K0.1 following increased dollar inflows on interbank as well as from corporates, according to its market report.
The bank notes that the US dollar/Kwacha currency pair, opened at K9.95 / K10.00 in early trade but was later being quoted at K9.85 / K9.90 by mid-day.
The Kwacha closed at K9.85 / K9.90, K0.1 stronger than the day’s opening rate.

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