• The Kwacha had significantly gained and reached what could be described as the lowest.
• Demand kicked in and a lot of people had been looking for dollars.
• The currency is still trying to find a place where to settle.
The Kwacha has continued to depreciate despite having recorded gains against major convertible currencies the last few weeks.
According to a Financial Analyst, the depreciation of the currency is due to high US dollar demand on the financial market against limited supply.
Speaking in an interview with Money FM News, Mambo Hamaundu said the recent significant gain in the currency resulted in high dollar demand, thereby putting pressure on the local unit, and making it lose strength against other major global currencies.
Mr. Hamaundu however noted that the local unit is still slightly below K17 compared with the devaluation of around K20 in previous months.
“We are coming from a period where the Kwacha had significantly gained and reached what could be described as the lowest, and because of that, demand kicked in and so a lot of people had been looking for dollars and that has put quite a bit of pressure on the currency resulting in it losing strength marginally in the last couple of days.”
“But of course it is still below where it initially came from because if you do recall the dollar Kwacha rate was around K20, but it is now slightly below K17 which is still okay,” Mr. Hamaundu said.
He observed that the rate of depreciation is not as fast as the rate at which the Kwacha appreciated, therefore the local currency is still trying to find a place where to settle.
“Considering the fact that the rate of depreciation is not as fast as the rate at which it appreciated, it appears that the Kwacha is still trying to find a place where to settle, and one can only hope that it will settle between K16 and K17 so that of course for business purposes, people must be able to plan a bit more easily,” he added.
And Mr. Hamaundu said Zambians are hoping that some level of stability and predictability in the Kwacha will soon be attained so that the country can be back on a path to economic recovery.
“Once those two kick in, we are likely to see an improvement on the business side in that it becomes easy to plan and focus for the long term as opposed to what was happening where people are not really too sure on where the rate will go to, whether it will settle or not and that in itself made some investors to really not want to invest in the Zambian economy but we are hoping that some level of stability will be attained soon so that the country can be put back on a path to economic recovery,” Mr. Hamaundu stated.
The local currency has opened the market today trading at K16.30 Ngwee and K16.63 Ngwee, after closing the market yesterday at K16.27 Ngwee and K16.60 Ngwee on a bid and offer respectively.
