• The Kwacha performed very well last week.
• Issuance of T-Bills and Bonds were the major key support to the already favorable environment for the Kwacha.
• This week, the local unit is expected to trade between K15.02 and K15.07 per dollar.
Centre for Trade Policy and Development (CTPD) says the Kwacha appreciated throughout last week buying at K16.72 per US dollar and selling at K16.77 as at 23rd of August, 2021.
Centre Head of Research Boyd Muleya attributed the development to the issuance of Treasury Bills and Bonds by the Central Bank on 26th August, 2021.
Mr. Muleya stated that the issuance of T-Bills and Bonds were the major key support to the already favorable environment for the local unit given the confidence that was brought in as a result of the change in government.
“We saw the Kwacha perform very well last week in the sense that from the 23rd of August, the Kwacha has been appreciating throughout the week, from the buying capacity of K16 .72 per dollar and the selling capacity of K16.77. We saw it actually end up the week at the buying power of K15.92 as well as the selling capacity of K16.97.”
“Last week we had the issue of investor confidence that has always been the issue, issuance of Treasury Bills and the Bonds also boosted the Kwacha,” Mr. Muleya noted.
And Mr. Muleya disclosed that another factor that has contributed to the continued appreciation of the Kwacha is the US$1.3 billion which the country received from International Monetary Fund (IMF) on 23rd August 2021, under the Special Drawings Rights (SDRs).
He said this is because the allocation speaks to sentiments about how it may turn out if the money is injected into the economy.
“On the 23rd of August, which is last week we were able to receive $1.3 billion in terms of allocation of the Special Drawings Rights. But what has this done to strengthen or give the Kwacha that buoyance has been the result of confidence, so it speaks to sentiments about how it may turn out if this money is infused into the economy, that has potential to further strengthen the Kwacha,” he explained.
Mr. Muleya further stated that this week, the local unit is expected to trade between K15.02 and K15.07 per dollar, adding that it is the stability that will come as a result of effects of last week’s activities such as the issuance of Treasury Bills and Bonds.
The currency has opened the market trading at K15.79 and K16.09 on the bid and offer respectively.