Kwacha likely to remain firm

THE Kwacha’s current movement is expected to be stronger in the short term on account of monthend obligations, financial market players predict.

 

Both, Cavmont Bank and First National Bank (FNB) anticipate the Kwacha to firm up against the United States (US) dollar due to positive market sentiments and as exporters convert the greenback to meet their monthend obligations.

 

“Current trends seem to indicate that the local unit is likely to remain firm in the interim, with a bias towards appreciation as ex-porters convert for monthend obligations,” Cavmont market report indicates.
On Tuesday, the Kwacha maintained a firm stand against the US dollar as demand was matched by supply after it opened at K7.66 / K 7.68, K0.015 weaker than Monday’s closing level and traded at these levels for most of the day.

 

It says the demand side was mostly subdued as importers continued anticipating for a stronger Kwacha.
Similarly, FNB in its daily treasury predicts that some activity could be seen as foreign exchange earners sell currency to generate Kwacha for their monthend obligations.

 

“There is a slightly positive vibe which could bode well for the currency. Considering yesterday’s [Tuesday’s] limited moves, a break of 7.600 is quite unlikely. We see the level as a support.
“The Eurobond story has certainly provided some comfort in the midst of a myriad of headwinds that brought untold misery to the Kwacha. The currency has been steadily gaining ground since the Eurobond story hit the markets. Dollar supply has also been improving,” it says.

 

Citibank also says the local unit continues to trade sideways, with main drivers being the boost in copper prices and relatively tight market liquidity providing some level of support to the Kwacha.
In its daily market report, the bank also attributes the boost in the Kwacha to some pockets of monthend dollar demand from corpo-rates.