This week, currency in Africa’s producer, the kwacha is expected to trade on a back footing. This follows an uptick in dollar demand from the agriculture sector to meet input costs. The kwacha opened today’s trading at 11.95 for a unit of the green back and is expected to trade within a narrow band of 11.92-12.05 should dollar demand persist.
Coming from a tax season that offers support for the kwacha, very little conversions from dollar to kwacha are expected save those from corporates that will be looking to fund local currency salary obligations.
With a treasury bill on the horizon for next thursday, attractive yields are likely to be magnetic to off-shores that may be looking to tap into 24.0001% yields in 1 -year investments. If this does happen, the kwacha could be on a winning streak with possible appreciation a few points stronger to 11.75-11.85 per unit of dollar.
Global uncertainty and pessimism on Chinese slow down in growth is likely to wane demand for riskier assets such as base metals resulting in a stronger dollar environment. This is expected to hurt most emerging market currencies the kwacha inclusive.
