•       The level of depreciation has increased compared to earlier days.

•       The Kwacha depreciated by 2.76 percent over the course of the week.

•       Key drivers still remain the elevated level of foreign exchange demand in the market.

The Zambian Kwacha has failed to sustain its gains against the United States dollar as demand outweighs supply on interbank market.

On Monday this week, the Kwacha opened the market trading at K17.87 ngwee and K18.22 ngwee.

And today, the local unit has been quoted at K17.99 Ngwee and K18.34 ngwee respectively.

According to financial market players, the Kwacha is likely to continue being under more pressure in the coming days.

Economist Dr. Patrick Chileshe observed that the local currency’s depreciation rate has gone up compared to the early days of this year.

Speaking an interview with Money FM News, Dr. Chileshe revealed that the Kwacha weakened by 2.76 percent over the course of last week, which was the most depreciation in the last five weeks.

“What has been happening with the Kwacha is that the level of depreciation has actually increased compared to earlier days. We saw the Kwacha depreciate by 2.76 percent over the course of the week, which was the most depreciation in the last five weeks,” Dr. Chileshe said.

He attributed the persistent depreciation of the local unit to high level of foreign exchange demand in the market, against limited supply.

“The key drivers still remain the elevated level of foreign exchange demand in the market, whereas the level of supply still remains relatively weak, and going into this week we still expect the Kwacha to continue depreciating and we could see it touch a low of 18.03 to K18.05 by the close of the week,” he stated.

And Dr. Chileshe stressed the need to diversify the country’s export mix by exporting more goods and services, as part of the long term measures that could help stabilize the Kwacha.

He noted that the current foreign market regulations are a major contributing factor to the depreciation of the currency because they have taken off much of the supply from the market, therefore the need to make the fundamentals right.

What is important is to make the fundamentals right and from a personal view, what I feel is that the current foreign market regulations I think are a big contributor to the depreciation of the Kwacha in the sense that they have taken off much of the supply from the market, and what that is doing is that it is causing the currency to be in one direction. The other things I think are long term are not things that can have an impact almost immediately.”

“The long term measures could also include diversifying export mix to ensure that export a lot more goods and services than we are doing now where we are relying largely on Copper exports, we need to have more exports that we need to rely on,” he stated.