Mid-month tax obligations to strengthen Kwacha

LOW corporates demand for the United States (US) dollar as they set aside the Kwacha to meet their mid-month tax obligations is expected to provide support to the local unit, Zanaco Bank says.
In its daily treasury newsletter, the bank says the local unit is anticipated to be capped between K7.30 and K7.40 range in the near-term.
“Desire for hard currency from corporates is typically low around this time of the month, as they set aside the Kwacha to meet their local mid-month tax obligations. This is likely to provide support to the Kwacha,” the statement reads.
On Monday, the Kwacha firmed on the back of lower local currency liquidity in the money markets and slow dollar demand by corporate companies.
The market opened with commercial banks quoting the local unit at K7.35 and K7.37 per greenback, slightly weaker than Friday’s close of K7.34 and K7.36.
The bank says the Kwacha traded flat for most of the day to close to 0.5 ngwee stronger than its opening level.
Similarly, Finance Bank Zambia in its daily market update says the Kwacha was expected to trade in the range of K7.30 and K7.40 level yesterday.
The bank says the local unit traded within the range of K7.35 and K7.37 on Monday due to equalled dollar supply and demand in the wholesale market.
Meanwhile, Cavmont Bank in its market report says the Kwacha opened at K7.35 and K7.37 against the dollar on Monday largely unchanged from Friday’s opening rate.
The bank says the local unit closed trading at K7.34 and K7.36 maintaining the same level as Friday’s closing rate last week.

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