By KALONDE NYATI
THE absence of debt auctions on the financial market has triggered the downward performance of the Kwacha, an analyst says.
Zanaco Bank says the local unit was yesterday expected to continue losing ground due to increased demand for the dollar, which was in low supply due to the absence of debt auctions.
The Kwacha, which opened the week on a low note, is expected to continue losing ground as the market continues to witness low United States (US) dollar inflows.
“Today [yesterday], trading is expected to be capped between K6.10 and K6. 20 with a bias to lose more ground as the market appears to be heavy on the demand side in the absence of debt auctions that have consistently supported the local unit,” the bank says in its daily treasury.
On Wednesday, the Kwacha was significantly weak, weighed down by demand for dollars from commercial banks and importers, down by K0.10 from Tuesdays close.
On the international front, the British pound hovered near a 10 month -low on Tuesday and the cost of hedging against further weakness soared to three-year highs as investors worried about the potential impact of a Scottish vote for independence.
Similarly, the euro fell on expectations that the ongoing improvement in the US economy will lead the Federal Reserve beginning to raise rates next year, while the euro and the Japanese yen are being weighed down by flagging economies and slow inflation in the euro zone and Japan respectively.