• Last week, the Kwacha appreciated by more than 2.5 percent.
• This was due to improvement in terms of supply on the interbank market.
• The level of demand for foreign currencies declined during the week under review.
The Zambian Kwacha has rebounded from K17.06 ngwee per United States dollar recorded early last week.
The local unit has decreased by 1.25% to 16.48 today Wednesday July 6 from 16.60 in the previous trading session.
According to Financial Experts, the Kwacha recorded marginal gains against the United States Dollar and marginally appreciated from a monthly average of K17.11 per US$ in May 2022 to K17.04 per US$ in June, 2022.
And an Economist observed that last week, the Kwacha appreciated by over 2.5 percent, against the United States dollar and other major global convertible currencies.
Dr. Patrick Chileshe attributed the appreciation of the currency to improved supply of US dollars on the interbank market against less demand for the exchange rate during the week under review.
Dr. Chileshe told Money FM News in an interview that positive sentiments also contributed to the gains in the local unit.
He said this follows the announcement by Bank of Zambia that the level of reserves has improved to US$3 billion from around US$2.8 billion.
“We saw the Kwacha appreciate last week by more than 2.5 percent and basically the reasons behind this appreciation was improvement in terms of supply on the interbank market. We saw the levels of supply improve. We also saw the level of demand for foreign currencies decline during the week under review,” Dr. Chileshe disclosed.
And Dr. Chileshe said the Kwacha is this week expected to be stable but with a bias towards an appreciation, due to low demand for foreign currencies in the market amid high supply.
“Going into this week, our view is that the Kwacha is going to trade stable but with a bias towards an appreciation basically because of low demand for foreign currencies in the market currently amid high supply as well as the positive sentiments that are emanating from the improvement in the level of bank reserves that the Bank of Zambia is currently holding,” he added.
Last year at this time, the Kwacha was trading around K22 per US dollar and it has since moved down by almost K5.
If sustained, the appreciation of the local unit currently being experienced will help retain confidence in the economy leading to an economic boost.