The currency in Africa’s copper producer Zambia, the Kwacha, has been on a winning streak over the last 3 weeks rallying to highs of 12.55 for a dollar, last seen in April. Currently trading for 3 month highs, the copper currency crossed its 100 day moving average of 12.602 for a unit of dollar on Tuesday 09 July the Kwacha has shown shown signs of vulnerability to further bulls. However some analysts in the market have tagged the appreciation as being artificial and unsustainable. Nikiwa Capital Managing Partner Munyumba Mutwale said the Kwacha rally is artificial, unsustainable and not backed by fundamentals during the Behind the Markets morning segment on MoneyFM radio on 12 July.
“Zambia needs stronger growth than the 2-3% it has recorded over the last two years, Mutwale said.
Earlier on the same program on 11 July the Business Telegraphs Mutale Chewe forecast a stronger Kwacha in the period of the open tax window running to the 16 July supported by short cash markets fueling a flurry of dollar conversions by players looking for Kwacha to fund the statutory obligations.
“Markets are net short and this has triggered central bank presence in Open Market Operations to inject liquidity being absorbed by Kwacha demand which is supporting the exchange rate,” she said in a note to premium clients.
Other pockets of demand capping the momentum of appreciation are the usual suspect sectors such as energy which Zambia pays for in dollars the note carried.
Complied by Oscar Meander
