TRYNESS TEMBO, Lusaka
IN THE short term, the Kwacha is expected to remain strong against the United States (US) dollar as corporates convert to meet their month-end salary obligations and participate in the Treasury bill auction today.
This entails that the local currency market is likely to be awash with sufficient greenback inflows.
First National Bank (FNB) says the market will witness increased dollar conversion to generate Kwacha for Treasury bill auction settlements.
In its daily newsletter, the bank says the local unit is expected to trade between K9.20 and K9.25.
“The Kwacha hardly moved yesterday [Tuesday], with little local sentiment to drive the rate. The unit traded in the range of K9.22 and K9.27 throughout the day, giving reason to believe that the dollar supply that swamped the market at the beginning of the week is over,” the report reads.
Similarly, Cavmont in its market report says outlook for the Kwacha/dollar pair remains positive in the short term.
Zanaco also says the local unit trading range yesterday was expected to be capped at between K9.15 and K9.25 with a strong bias as corporates convert their currency to settle month- end salary obligation.
On Tuesday, the Kwacha held firm both in the morning and afternoon sessions, helped by tight local currency liquidity and weak demand for dollars from corporates.
Meanwhile, copper was trading flat in early Asian trade yesterday, capped by a stronger dollar that pushed prices lower overnight.
Reuters reports that the dollar touched a five-week peak overnight, making it attractive for sellers of copper in other currencies to unload positions and book arbitrage profits.
Three-month copper on the London Metal Exchange was little changed at US$5,660 a tonne after falling 1.2 percent in the previous session.