THE Kwacha further lost its ground against the United States dollar to trade at K6.7 level on Thursday because of continued high demand for the greenback, financial analysts say.
And a financial analyst, Maambo Hamaundu, says the continued fluctuation of the Kwacha against the dollar has been influenced by investor perceptions on Zambia’s economy.
Access Bank says the Kwacha depreciated further to trade at levels of K6.68 and K6.7 after opening at K6.625 and K6.645 against the dollar on Thursday.
In its morning digest, the bank observed that the local currency marginally recouped some of its losses against the greenback during the trading session on Thursday to trade at levels of K6.6 and K6.62 as a result of the Bank of Zambia’s intervention.
The bank says the local unit closed the day weaker at K6.645 and K6.665 on the interbank.
Standard Chartered Bank also says the Kwacha closed the foreign exchange market trading at K6.63 and K6.65 on Thursday, 30 points higher than the previous close.
Similarly, Cavmont Bank’s market report says the local unit remained under pressure against the dollar as Thursday’s trading session witnessed it reach a new low of K6.7 driven mainly by increased dollar demand on the interbank.
“The current trend indicates that the performance of the local unit will mainly be a function demand and supply,” the statement reads.
The currency pair opened at K6.62 and K6.66 and closed at K6.63 and K6.67 on the bid and offer, respectively.
Mr Hamaundu said there is need to change the perception of investors on the direction of the Zambian economy and issues of political stability.
He said there has been an imbalance between the supply and demand of the dollar because the country is not investing much in the manufacturing sector.
“There is need for the government to manage the perception of investors on direction of the country’s economy, including the issues of political stability due to a number of statements made recently. Investors are a bit apprehensive to invest in Zambia,” he said.
Mr Hamaundu, however, said in the long run Government needs to invest more in the manufacturing sector to increase exports and earn more foreign exchange on the international market.
Zambia Daily Mail