TRYNESS TEMBO, Lusaka
AS COMPANIES sell their United States (US) dollars to pay wages and suppliers at the month-end, the Kwacha is expected to make further gains against major convertible currencies as copper price edged up on Friday to trade at US$5,669.50 a tonne.
Zanaco says the local unit is expected to trade in the range of K9.15 and K9.25 in the near term.
“Near term outlook for the Kwacha remains bullish with the local currency likely to make further gains against the dollar next week [this week] as firms sell dollars to pay wages and suppliers at the end of the month,” the bank says in its daily treasury newsletter.
The bank also says the Kwacha gained against the dollar on Thursday, with support for the local currency emanating from exporters converting to meet mid-month tax obligations.
On Thursday, the local unit opened trading at K9.25 and K9.30 per dollar. Unmoved from the previous day’s close, the Kwacha was propped up to an intraday high of K9.19 and K9.24 by strong dollar selling by exporters while demand waned in comparison.
Zanaco says the Kwacha appreciated by six ngwee on the day.
Similarly, United Bank for Africa says the local currency market opened Friday’s session trading at K9.20 and K9.25 on the interbank respectively.
The bank says the Kwacha reversed its marginal losses against the dollar and is expected to remain on the front foot.
First National Bank also says timing of flows remains a key factor which could result in intraday swings.
And Cavmont Bank says on Thursday the Kwacha outperformed other currencies which depreciated against the world’s reserve currency after the US Federal Reserve increased interest rates by 0.25 percentage point.
Meanwhile, copper edged up on Friday but was on track for its biggest weekly drop since early May as markets priced in a higher US interest rate environment that would support the dollar.
Reuters reports that copper on the London Metal Exchange had risen 0.2 percentage point to US$5,669.50 a tonne, but was down by about two percent last week.