• Last week, the Kwacha lost about 30 basis points.
• It opened on a weaker note and has continued to depreciate.
• There has been a slowdown in supply of foreign exchange on the market
The Zambian Kwacha has continued to trade under pressure against the United States Dollar.
In Yesterday’s trading, the local unit slightly lost value against the Dollar on continued greenback importer demand and high local currency liquidity in the money market amid limited inflows.
According to a Commercial Bank, market participants looked to buy the US dollar to fill their orders ahead of the holiday tomorrow and Friday as the country goes to the polls.
And an Economist told Money FM News in an interview that the currency lost about 30 basis points in last week’s trading, while it opened on a weaker note this week and has since continued to lose strength.
Dr. Patrick Chileshe however stated that the losses are minor because they are just a way in which currencies usually trade after over reacting to some information.
He noted that in the earlier few weeks, the local unit appreciated excessively, thereby forcing a lot of holders of foreign exchange to start panic selling.
“Last week we saw the Kwacha lose about 30 basis points in last week’s trading and this week it opened on a weaker note and it has continued to depreciate, as of this morning it was trading at K19. 25 per US Dollar and basically, that’s what is happening.”
“Now the big thing that we need to look at is why are we seeing these losses? In my view I wouldn’t call these really big losses these are just a way in which currencies usually trade after over reacting to some information,” Dr. Chileshe said.
Meanwhile, Dr. Chileshe noted that there has been a slowdown in supply of foreign exchange on the market, because a lot of people who sale dollars are not playing in the market, hence keeping supply low as the country goes to the polls tomorrow.
“If you recall in the earlier few weeks, what did happen is that the currency went on to an excessive appreciation, basically driving quite a lot of drivers of foreign exchange to start panic selling and they eventually over reacted, and that pushed the Zambian Kwacha to appreciating even more than the extent to which it would have gone, and What is happening is that the currency is just retracing those routes. But most importantly we have a very important event happening this week on Thursday, where we have the general elections where we will be choosing the new leadership for the country.”
“In my view, what has happened is that we have seen quite a slowdown in terms of supplying the market of foreign exchange, with quite a lot of those who hold US Dollars who transact in business that requires them to sale dollars are not playing in the market and that is keeping supply low.”
He stated that on the other hand, there has been a relatively higher number of players who are willing to buy the US dollar for purposes of hedging away the risk of potential reversal in the trend of the Zambian Kwacha in the post-election period.
Today Wednesday 11th August 2021, the local currency has opened the market trading at K19.16 and K19.53