• The interbank market continues to experience net inflows of dollars against limited hard currency demand.
• The interbank market opened Thursday’s trading session at K24.74 and K24.79 per US dollar on the bid and offer respectively.
• The local unit is expected to remain stable throughout today’s trading sessions.

The Kwacha has continued to post gains since the announcement of Zambia’s successful debt restructuring deal last week.

According to Zambia National Commercial Bank (ZANACO)’s treasury team, this is as the interbank market continues to experience net inflows of dollars against limited hard currency demand.

The interbank market opened Thursday’s trading at K24.74 and K24.79 per US dollar on the bid and offer respectively, and closed stronger at K24.65 and K24.70.

The Bank expects the local unit to remain stable throughout today’s trading sessions.

With regards to local currency liquidity, “Bank of Zambia maintained its absence on open market operations in a bid to tighten money supply in support of the foreign exchange market.”

“Local currency liquidity was K2, 888.50 million and overnight interbank activity was K450 million. The weighted cost of the overnight interbank funds was 18.4%,” the bank stated.

And Economist Dr. Lubinda Habazooka told Money FM News in an interview that debt restructuring could negatively impact the value of the Kwacha once debt servicing commences.

Dr. Haabazoka explained that once the country starts servicing the debt, there will be increased pressure on the Kwacha as demand for foreign exchange will rise on the interbank market.

“Zambia’s resumption of debt servicing after a four-year period should be something worrying for the country,” he stated.

Zambia’s Kwacha is Africa’s best performing currency against the US dollar so far this year after the central bank sharply tightened monetary policy.

However, financial analysts are of the view that the local unit can only strengthen sustainably if the country attracts more foreign investment.