Kwacha to trade on backfoot

Written by on July 31, 2020


THE financial market anticipate that the Kwacha will close out the week on the back foot as demand continues to linger on with supply diminishing following the conclusion of month end conversions.

Demand for the greenback is increasing with the view that most trading countries are opening up markets amidst Covid-19 easing, says Absa Bank Zambia daily market report.

According to the report, the Zambian Kwacha traded weak in Wednesday’s session, adding more losses from the previous session. 

“At 08:30hrs the kwacha was quoted at 18.200/18.250 against the US dollar on the bid and offer respectively, depreciating throughout the day to close 4 Ngwee weaker at 18.240/18.290/US$,” said the bank.

Cavmont Bank Zambia indicated that in the interim, market participants would remain cautious and would look to determine the currency pair’s next move.

The Banks aid the local until was still largely unchanged against the United States dollar on Wednesday as it continued trading K18.225 / K18.275. 

“The currency pair did at some point almost breach the $1/18.300 barrier as some interbank players started protecting their offer side. 

“Market activity was mostly subdued during the session with very little being seen from importers,” Cavmont said.

On the money market, the volumes of funds traded on the interbank moved downwards in yesterday’s trading session to K487.80 million from K555.00 million.

The liquidity levels however were little changed moving to K3, 559.79 million from K3, 680.59 million seen the previous day. 

The overnight interbank rate was back to its habitual level of 9.00 percent.

Meanwhile, the local markets were relatively quiet in Wednesday’s trading session with yields remaining unchanged. 

However, the 16/2020 Treasury bill primary auction was scheduled to be held yesterday. 

The previous auctions have been overwhelming from both onshore and offshore investors. 

The market expects the auction to be oversubscribed on the back of current liquidity with a drop in yields across all tenors.

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