Currency risks have continued to heighten in Africa’s red metal hotspot Zambia as Dollar demand builds to fund the agribusiness sector. The Kwacha has pointed north this week after most corporate resumed business this week having come from the festivity break. Having closed Wednesday 15 January at 14.55, dollar demand to fund the agriculture input sector is expected to run until April.
The copper currency was earlier on the bullish streak last week as corporates geared up for mid month and provisional taxes through dollar conversions that provided support to the Kwacha. Over K2billion was mopped in tax payments that saw the currency rally to 13.95 for a unit of dollar.
Analysts still forecast dollar demand from the central bank that remains an off taker of the green back as it shores up falling reserves in addition to foreign exchange appetite to fund crude imports. External debt service in the year will be another key driver of dollar demand to weigh the exchange rate.
Medium term forecast for the copper currency remains 14.35-14.65 for a unit of green back.
The Kwacha Arbitrageur