• The Kwacha did show appreciation especially last week.
• It appreciated by 6. 8 compared to a depreciation of 8.3 percent the previous week.
• Key factors that informed this appreciation was increase in FX injection by the Central Bank.

The Kwacha has started posting minor positive gains following the intervention by Bank of Zambia through an injection of 41.5 million US dollars into the market on Monday last week.
According to financial market players, the Kwacha will remain trading within the range bound in the short to medium term as the local currency is likely to trade within the current performing levels looking at the prevailing market conditions.
And Economist Dr. Patrick Chileshe noted that last week, the local currency appreciated by 6. 8 percent compared to a depreciation of 8.3 percent recorded in the previous week.
Dr. Chileshe told Money FM News in an interview that the appreciation was a result of the increase in Foreign Exchange injection by Bank of Zambia.
He said another factor that contributed to the Kwacha’s strong performance was an increase in inflows from offshore investors who were preparing to invest in last Friday’s bond auction as volumes traded on the interbank were averaging about 14 million US dollars compared to about 2.2 million US dollars in the previous week.
“The Kwacha did show appreciation especially last week, we saw the Kwacha appreciate by 6. 8 percent compared to a depreciation that was recorded in the week before that which was about 8.3 percent. The key factors that informed this appreciation was the increase in FX injection by the Central Bank, which saw the bank inject a total of 41.5 million US dollars on Monday alone.”
“In addition to this, we also saw quite a lot of inflows from offshore investors who were preparing to invest in Friday’s bond auction. An example of that came through increase in terms of volumes traded on the interbank which were averaging about 14 million US dollars compared to about 2.2 million US dollars in the previous week. So the confluence of these two factors created a momentum for the currency to start appreciating again,” Dr. Chileshe noted.
Dr. Chileshe however noted that this week, the exchange rate is appreciating at a slower pace than it was appreciating last week.
He further observed that there might be a slow- down in terms of the strong performance of the Kwacha with a bias towards a depreciation at the end of this week because offshore investors who had come to buy bonds will be off the market.
“Going into this week we do expect that even with the reverse that we saw last week, we might see a slow- down in terms of the strong performance of the Kwacha with a bias towards a depreciation towards the end of the week given that offshore flows will be off the market, because those who had come to buy bonds are not going to be around to support the currency. We are also expecting the levels of demand to also pick up as we edge towards the end of the weekend,” he stated.
According to Bank of Zambia, the Kwacha gained strength against the United States Dollar in December 2021 as a result of positive sentiments after Zambia and IMF reached a Staff Level Agreement, as the appreciation rate declined to 7.4 percent in the fourth quarter of the year from 17.5 percent in the previous quarter.