THE kwacha’s depreciation against major currency convertibles has continued as reduced supply of US dollars has seen the local currency come under pressure, according to financial market players.
The kwacha has continued to depreciate against the dollar amidst reduced supply of foreign exchange and higher demand, putting the local unit under pressure and trading between K9.49 and K9.62 per dollar by the end of April.
According to FNB Zambia, the local currency had continued depreciating against the dollar.
“Trades went through above K9.60 in Thursday’s trading session, confirming that the kwacha has lost the steam experienced last week due to reduced supply of foreign currency. The supply of dollars on the local market remains subdued,” FNB stated in a treasury newsletter.
FNB stated that the current trading levels were expected to rise as corporates are holding back their dollars in anticipation of the local unit weakening further.
“Most corporates are holding on to their dollars with the view that the kwacha will weaken further and thus get a higher return from their conversions later on. We expect to see continued gradual moves higher, with the rate being determined mostly by supply as demand is consistent. Indications are that most trades will go through above US$/K9.62,” stated FNB.
And Cavmont Bank also observed that the local currency’s performance weakened on
Thursday, as the kwacha continued to come under pressure against the dollar.
“Thursday’s trading session saw the kwacha remain under pressure against the US dollar despite opening at K9.55/K9.57, owing to inadequate dollar supply. Recent trends seem to suggest that the current performance of the kwacha is likely to continue in the short-term in the absence of improved supply. The kwacha closed at K9.62/ K9.64, K0.07 weaker than the day’s opening rate,” stated Cavmont in a market report.
The local currency was also found trading at K9.52 and K9.69 on Friday, according to a Zanaco treasury update.