Business

Treasury bill auction to aid Kwacha

TRYNESS TEMBO, Lusaka
THE upcoming Treasury bill auction and month-end salary obligation are anticipated to give support to the Kwacha, which has weakened in the past few days against the United States (US) dollar, financial market players observe.

On Friday, the local currency weakened against the greenback to trade at K9.01 and K9.06.
Zanaco says the Kwacha is anticipated to remain under pressure from an increase in importer demand and slowdown in corporate dollar selling.
In its daily treasury newsletter, the bank says the local unit is expected to trade between K8.95 and K9.05 in the short term.
“The Kwacha could get support from month-end salary obligations and upcoming bill auction,” the newsletter reads.
On Monday, the local unit was marginally stronger due to dollar inflows from corporates. It opened trading at K9.00 and K9.05, unmoved from Friday’s close.
Zanaco says the Kwacha touched an intraday low of K9.03 and K9.08 on the bid and offer respectively, but closed the day six ngwee shy of its low at K8.97 and K9.02.
Similarly, First National Bank (FNB) in its daily newsletter says the Kwacha remains vulnerable due to factors of demand and supply.
The bank says nonetheless, momentum seems to favour a move slightly higher.
“The currency remains susceptible to swings given the nature of the market. For now, resistance seems to have been established at K9.05, with K9.00 still seen as a firm base,” FNB notes.
It however says the market remains flush with liquidity and the excess will most likely be channelled towards the Treasury bill auction at the end of the week.
Cavmont also says the performance of the Kwacha is expected to be driven by demand and supply factors in the short to medium term.
Meanwhile, copper price on the London Metal Exchange (LME) yesterday traded flat.
Three-month copper on the LME traded mostly flat at US$6,408 a tonne. Prices hit their highest in more than two and half years on August 9 at US$6,515 and are up almost eight percent this quarter.

 

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