• The Kwacha gained strength especially in the last five or six days.
• That was driven by increased FX supply to the market by Bank of Zambia.
• Demand for US dollars was low in the previous week, leading to the appreciation of the Kwacha
Bank of Zambia’s continued intervention into the interbank market through the injection of United States dollars has resulted in the appreciation of the Kwacha.
To moderate the volatility in the exchange rate, the Central Bank was offloading an average of US$ 13 million per day last week.
And an Economist noted that while there was consistent Foreign Exchange supply by the Central Bank last week, demand for United States dollars was low.
Dr. Patrick Chileshe told Money FM News in an interview that this led to the appreciation of the currency by almost one percent.
Dr. Chileshe explained that going into this week, the local unit is expected to be stable with a bias towards an appreciation.
“We have seen the Kwacha gain strength especially in the last five or six days especially towards the end of last week and that was driven by increased FX supply to the market by Bank of Zambia which was consistent in the market, whereas the demand for US dollars was low in the previous week and that led to the appreciation of the Zambian Kwacha by almost one percent,” Dr. Chileshe noted.
He however said the demand for Foreign Exchange is likely to increase because importers are trying to take advantage of a cheaper US dollar to stock up their dollar reserves.
“However, we are cognizant of the fact that the demand for FX could increase because of the recent appreciation as importers try to take advantage of a cheaper dollar to stock up their dollar reserves for import of goods and services,” he stated.
The USD/ZMW rate has today Thursday 9th June, 2022 increased by 0.24% to 16.90 from 16.85 in the previous trading session.
Some Commercial banks in Lusaka have quoted the currency at K16.78 and K17.11
According to Trading Economics global macro models and local analysts, the Zambian Kwacha is expected to trade at 17.41 by the end of this quarter.