Kwacha slightly strengthens against US dollar
By Buumba chimbulu
THE Kwacha strengthened against the United States dollar during Thursday’s trading session, sustained by the Bank of Zambia’s support and significant inflows from large corporates converting for early month-end obligations.
The currency pair opened the day at K27.775/27.825 per dollar at 08:30 hours and continued to appreciate through the day, according to Absa Bank Zambia in its daily market update.
“By mid-day, the Kwacha gained further ground, trading at K27.600/27.650, where it closed for the day. In the near term, the Kwacha is expected to remain firm, with its trajectory influenced by the interplay between foreign currency demand and supply,” the update indicated.
The selling pressure on the Kwacha finally eased yesterday, with the USD-ZMW pair closing the day at 27.6889, according to Bloomberg data, down around 0.35 percent on the session.
Despite the better session for the Kwacha yesterday, the outlook remains bearish, given the strong United States and the impact of the drought locally.
On the other hand, the International Monetary Fund (IMF) funds toward the end of the year will provide some relief, but this will only be temporary, and the Kwacha’s vulnerability would persist.
Elsewhere, South Africa’s rand firmed on Thursday after the central bank opted for another small cut to its main interest, quashing hopes of a bigger move.
South Africa’s central bank lowered its main rate by 25 basis points to 7.75 percent, as expected by economists polled by Reuters.
The rand traded at 18.0425 against the dollar, about 0.4 percent stronger than its previous close.
Meanwhile, base metal prices mostly traded lower yesterday, pressured by a stronger dollar and risk-averse sentiment due to the escalating conflict in the Ukraine-Russia war.
Three-month copper on the London Metal Exchange eased 0.1 percent to US$8,999 per metric tonne, while the most-traded December copper contract on the Shanghai Futures Exchange fell 0.9 percent to US$10,184.65 a tonne.
