BUUMBA CHIMBULU writes
VOLATILITY characterised the market in the previous week’s trading sessions as supply from corporates meeting their tax obligations supported the currency earlier in the week.
This pushed the performance of the Kwacha against the dollar down to K18.16 levels, Absa Bank Zambia has said.
On Friday last week, the Kwacha, like most currencies made recovery against the greenback following a flight to risky assets by investors globally.
Absa however said the supply was not sustainable as mines who provided a substantial portion of foreign currency were barely in the market.
It explained that this followed the directive from the Zambia Revenue Authority ordering them to remit their taxes in United States dollars which was effective 1st June, 2020.
“The currency thus depreciated as the week came to an end closing at K18.30/18.35 on the bid and offer respectively.
“As a fresh week begins, we expect the local unit to trade defensively as demand lingers on,” said the Bank in its daily market report.
Zambia Industrial Commercial Bank (ZICB) said the local currency which opened at 18.300/18.350 looked like it would weaken further.
ZICB explained that this would happen considering its performance during the week and had even touched intra-day lows of 18.325/18.375.
“Mid-month conversions by corporate continued to provide tailwinds which saw the currency pair close at 18.225/18.275 recording a marginal appreciation of K0.075 compared to its opening levels,” ZICB said.
Cavmont Bank Zambia said it expected the Kwacha in the interim to continue oscillating between gains and losses, with minimal movements to the downside though within a minimal range.
It said the Kwacha reversed its losses against the dollar on Friday following an improvement in supply on the interbank.
“The local unit had initially opened at K18.300 / K18.350 and touched an intra-day low of K18.350 / K18.400.
“By afternoon however, most interbank players were seen quoting the currency pair at K18.200 / K18.250, a level it maintained until close of business,” Cavmont said.