• Last week, the Kwacha largely depreciated.
• There was no bond auction which could have provided supply.
• The Kwacha is this week expected to continue trading on a weaker note.

The Zambian Kwacha has again lost strength against other convertible currencies, barely a month after posting gains.
According to an Economist, the local unit largely depreciated last week due to high currency demand on the financial market against limited supply.
Dr. Patrick Chileshe said this is because there was no bond auction last week which could have provided the much needed supply.
Dr. Chileshe stated that the situation prompted Bank of Zambia to intervene in the market by supplying foreign exchange to help reduce the weakening of the local unit.
“Last week, the Kwacha largely depreciated and the reason was that we had quite a lot of demand on the financial market, where as supply was limited. We didn’t have a bond auction which could have provided that supply, that was not on the market and led to the Bank of Zambia actually intervening in the market, where they supplied foreign exchange to reduce the depreciation of the Zambian Kwacha,” Dr. Chileshe said.
Meanwhile, Dr. Chileshe stated that the Kwacha is this week expected to continue trading on a weaker note.
He said the Treasury Bill auction which will take place this week is not expected to have any influence because offshore investors prefer government bonds which are long term.
“Even though we will have the Treasury Bill auction this week, we don’t expect it to have any influence because offshore investors seem to be preferring government bonds which are long term, which will only go for auction next week on Friday.”
“So for this week we expect the Kwacha to remain largely on a weaker footing but we could start seeing flows into the market starting on Friday up to next week as offshore investors try to position themselves,” he added.
Recently, the Kwacha appreciated sharply mainly due to significant inflows from non-resident investors in Government bonds and improved market sentiments.
Between July 1 and August 31, 2021, the Kwacha strengthened by 29.6 percent to K15.94 per US dollar.
However, some commercial banks have today quoted the currency at K15.96 Ngwee and K16.26 Ngwee, while the Bank of Zambia has quoted the local unit at K16.08 Ngwee and K16.13 Ngwee on a bid and offer respectively.