THE foreign exchange market yesterday opened on a slow note with little flows going through the market.
This comes after the Kwacha weakened further against major trading currencies during the Wednesday trading session.
With the current prevailing conditions, which include sluggish inflows, there is more scope for a bearish trend yesterday morning in the currency performance.
At 8:30 hours yesterday, the currency opened at K11.00/US$ and K11.05/US$ for buying and selling respectively, and quickly buckled under pressure to trade at K11.10/US$ and K11.15/US$ for most of the morning session.
This is according to the Zanaco daily treasury newsletter. After mid-day on Wednesday, renewed corporate and importer demand further pushed the currency lower to trade at K11.120/US$ and K11.170/US$, levels last seen in the first quarter 2016.
“Year to date, the currency has depreciated by 11.5 percent. Much of this depreciation has happened in the last month with one of the major driver being contagion effects from emerging markets and low commodity prices,” said the bank.
Meanwhile, Cavmont Bank Zambia daily market report indicated that the local unit was likely to make a rebound once the current mismatch in demand and supply corrects itself.
It indicated that the Kwacha touched a new intra-day low on Wednesday as the mismatch in demand and supply continued to affect the movement of the USD/ZMW currency pair.
“The local unit was seen being quoted at K11.150 / K11.200 by noon compared to its opening levels of K11.000 / K11.050 during morning trading. Market activity was largely mute as most players remained cautious in anticipation of the local unit making a rebound,” said the bank.
And the local market liquidity levels decreased to K546.62 from a level of K622.62 million the recorded previously, indicating a decrease of K76 million in market liquidity.
The overnight interbank volume was at K387.00 million from K250.00 million the previous day.
Central Bank was active on Open Market Operations borrowing a total of K1.1 billion from the market with successful rates between 9.65 percent and 9.75 percent.