Kwacha appreciates, quickly depreciates

THE Kwacha has been for some time showed signs of revival when it traded between K5,180 and K5,200 against the United States dollar (US$) on Monday morning, market analysts have said.
But the appreciation was short-lived when it closed the day on Monday in the ranges of K5,200 and K5,220 with projections that it would trade between K5,180 and 5,300 yesterday (Tuesday).
The local currency has been under pressure on the back of flat copper prices which fell to a 2012 low of US$7,233 per tonne at the beginning of June from a high of US$8,740 in February, weighed down by sluggish demand from the world’s top consumer, China.
Barclays Bank Zambia says the Kwacha will in the short to medium term trade K5,100 against the dollar on the high side and K5,300 against the dollar on the low side.
“The short to medium-term outlook for the US dollar and Kwacha pair is mixed with the Kwacha likely to trade in the band of K5,100 against the US dollar on the high side and K5,300 per US dollar on the low side,” the Barclays Bank notes in its daily treasury newsletter.
Similarly, the Standard Chartered Bank daily brief says the local unit was yesterday expected to consolidate slightly above K5,200 against the US dollar adding that any rally above K5,270 is likely to be met with selling interest.
At the start of the week, the local unit was motivated by positive sentiment from the euro zone briefly dipping below K5,200 for the first time in two months to test an intraday low of K5,180 against the dollar.
“The move was however a mere knee-jerk reaction as market retraced to close at K5,205 and K5,225 level. Trading activities were mostly confined to the interbank market with only minimal flows on the corporate front,” the bank stated.
And Zanaco Bank says the Kwacha is expected to continue holding its ground against the US dollar in the near term and trade between K5,180 and K5,280 on the interbank.

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