Having opened trading at 18.475 the Kwacha sprinted 2.02% to an intraday low of 18.1000 again the Dollar on supported by corporate conversions to meet payroll obligations well ahead of the April month end. Foreign currency demand from central bank green back purchases saw the copper currency shave 1.13% of earlier gains to close trading at 18.305. The Kwacha technicals signal a rising momentum for further appreciation seeing that 22 April intraday lows of 18.1000 for a unit of dollar was firmer than previous days 18.225.
Zambia’s currency has shriveled in value over 50% as it grapples with low reserves currently at $1.38billion as dollar demand weighs significant. External debt service, agriculture inputs and petroleum funding are key drivers of dollar demand in addition to the central banks off taker purchases to shore up reserves for import cover.
Disinvestment risk as a consequence of capital flight given a strong dollar environment in the COVID19 era has exacerbated further foreign currency demand as investors appetite for riskier assets such as Kwacha government securities wanes in preference for safer haven assets such as US treasuries and gold.
The Kwacha is forecast to trend bullish in the week.
The Kwacha Arbitrageur.
