The Kwacha has posted some huge gains after the Bank of Zambia released borrowed Dollars on the market, as the ZWD reported yesterday.
But these gains will only last for a few days or weeks as it is artificial and not backed by any production.
According to Reuters, Zambia’s currency strengthened the most in seven years as traders said the central bank sold dollars to stem the kwacha’s slide after it fell to a record low this week.
The kwacha gained more than 11 percent to 12.38 per dollar by 12:04 p.m. in the capital, Lusaka, the biggest advance among more than 150 currencies tracked by Bloomberg and most since November 2008. The currency is rallying for a second day after falling to an all-time low of 14.6050 on Tuesday.
“With the central bank’s continued intervention, the interbank market is awash with dollars,” Lusaka-based Zambia National Commercial Bank Plc said in a note, saying banks will probably be selling greenbacks after holding long positions. “The kwacha is likely to hold firm against the dollar amid a bullish tone.”