Currency in Africa’s copper prouder, Zambia, has remained on the back foot on 23 July closing a few points shy of the 13 psychological barrier as dollar demand weighs. After having opened today’s trading session at 12.8 for a unit of dollar, the copper currency slid 1.2% to 12.95 as at close of business in the capital Lusaka.
Earlier hopes of a safety net to be provided by waves of conversion by corporate players, looking to raise funding to meet payroll obligations at month end, are fading as the Kwacha has extended losses from last week levels. Market traders had forecast that crossing the 12.85 benchmark would signal higher vulnerability for weakness.
Managing Partner for Nikiwa Capital Munyumba Mutwale on 12 July had said the Kwacha rally was artificial and was not backed by any fundamentals during a morning commentary on MoneyFMs Behind the Markets program.
Elevated currency risks are inflationary and could weigh business pulse through higher input prices and operating costs. Input inflation for Zambia was last at a 42 month high dampening private sector pulse as measured by purchasing managers index.l which for Zambia is still in the red zone at 46.6 (June).
Complied by Kondwani Phiri
