Kwacha to remain under pressure in the days ahead

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THE financial market expects the Kwacha to remain under pressure in the days ahead as the market witnesses a gradual surge in dollar demand.

Trading range of the local unit is expected to be between K10.300/$ and K10.400 in the short term.

Zanaco daily treasury newsletter indicated that the Kwacha was broadly weak against major trading currencies for most of last week as sluggish supply of foreign exchange continued to weigh down on the local unit.

“The currency opened Friday’s trading session unchanged from the previous day’s close of K10.170/$ and K10.220/$ on bid and offer, weakening steadily to touch an intraday low of K10.350/$ and K10.400/$, before regaining some losses to close the week at K10.270/$ and K10.320/$ on the bid and offer respectively,” said the bank.

And Cavmont Bank Zambia in its daily market report said the local unit was likely to continue coming under pressure in the near term in the absence of improved flows.

According to the bank, the local unit opened trading at K10.250/$ / K10.300/$.

“The market was characterized with minimal activity being seen from most market participants. By afternoon however, the local unit was being quoted at K10.300 / K10.350 on the interbank bid and offer respectively.

“The mismatch in demand and supply levels continue being the major drivers on the currency pair in the short to medium term,” said the bank.

Meanwhile, the local market liquidity levels increased to K1, 266.77 million from a level of K1, 044.50 million recorded previously.

This indicated an increase of K222.27 million in market liquidity.

The overnight interbank volume was at K193.60 million from K258 million the previous day.

The weighted average overnight lending rate closed at 9.25 percent. Given the current liquidity levels, rates were expected to trade below 9.95 percent in the near term.