Currency in Africa’s second largest copper hotspot extended its losing streak, flirting with lows of 12.82 for a unit of dollar in Friday 20 July trading session. The copper currency reversed over 1.5% of the strength it amassed over a three week period supported by net short local currency market positioning and the tax season conversions seen in the first weeks of July.
The Kwacha vulnerability to rallies was high given that it had crossed the 12.602 one hundred day moving average. However with tax season over and dollar demand clusters from the energy sector the copper currency has taken a knock sliding back to 1 month lows as players seek the green buck in a dollar short market.
“The market could see more dollar demand clusters in this weeks trading,” Nathaniel Onyambu an analyst said his morning commentary today. He also added that the market will run into conversions for month end payrolls this week.
With month end payrolls on the horizon, the market could see more corporates selling dollars to raise Kwacha funding to meet remuneration obligations. Should this actualize the Kwacha will earn some rally support in the interim that could see some of the losses incurred last week, reversed partially.
Other factors that could determine currency trajectory include the US Federal reserve outcome of next weeks FOMC meeting where markets are pricing in a 25 basis points which has weakened the dollar allowing emerging market currency rally.
Complied by Mutisunge Zulu
