Kwacha expected to continue trading range-bound

• Last week the Kwacha continued to trade stronger when the Bank of Zambia was in the market selling FX on Monday, Tuesday and Thursday.
• It traded weaker on Wednesday and Friday, when they were not in the market.
• Private flows on the interbank have also started improving as a result of sentiment positivity.

An Economist has observed that last week, the Kwacha continued to trade stronger due to Bank of Zambia’s intervention in the interbank market.
Speaking in an interview with Money FM News, Gerald Soko said the Central Bank entered the market on Monday, Tuesday and Thursday, selling foreign exchange to help stabilize the local currency.
Mr. Soko however noted that the Kwacha weakened by 0.15 percent on Wednesday and Friday as a result of the Central Bank’s absence from the market.
“Regards last week, the Kwacha continued to trade stronger when the Bank of Zambia was in the market selling FX on Monday, Tuesday and Thursday, and when they were not in the market on Wednesday and Friday, it actually traded weaker. But suffice to say that those movements were pretty much high, the end result was a Kwacha that was weaker but at a very slight margin speaking to the fact that demand is on the same path.”
“Two days it depreciated by 0.15 percent because the Central Bank was not in the market to support it, as you may know that they come through to sale FX to the market considering that the flows that previously would come to the market from the mining sector are now going straight to the Central bank. What you have is a situation where the majority of the supply in the market is actually moving from the Central Bank to the market. So the Kwacha is pretty much stable, with a weaker bias but very minimal last week,” Mr. Soko explained.
He further stated that in addition to the supply support from the Central bank, private flows on the interbank have also started improving, as a result of sentiment positivity regarding news that Zambia is getting financing assurances from external creditors to restructure its debt.
Mr. Soko also said the Kwacha is this week expected to trade range-bound, moving with a very tight margin.
“I think the terrain is going to be the same this week, we still expect the Kwacha to trade range-bound, moving with a very tight margin. The drivers are going to be the same, the move is still around the positive sentiments, we don’t expect it to post instant movements either appreciation or depreciation. So stability is expected to continue this week,” he said.
The US Dollar is currently buying at Sixteen Kwacha and selling at Sixteen Kwacha Thirty One Ngwee.

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