THE Kwacha fell to close at its lowest rate in over four years on Monday as a strong global appreciation of the United States (US) dollar filtered into the local market, financial analysts say.
Zanaco says the local currency fell sharply in early trade opening two ngwee lower at K5.50 and K5.52 for bid and offer respectively after closing at K5.48 and K5.50 on Friday.
“It [Kwacha] continued to slide through the morning session finally settling at K5.52 and K5.54 – its lowest closing level since April 2009,” Zanaco says in its daily treasury newsletter yesterday.
The bank says the downward movement was mostly an alignment with a global appreciation of the US dollar as economic data from that country supported views of a recovery from the current recession.
“In the near term the Kwacha is expected to remain weak trading between K5.47 and K5.55,” it says.
Similarly, Standard Chartered Bank says the Kwacha began the week on the back foot, sliding 40 points against the dollar earlier on Monday as strong corporate on the right hand side pushed up demand for the greenback (dollar).
It says the Kwacha’s stand was further exacerbated by global trends following general dollar strength against a basket of currencies.
“The trend is likely to prevail today . Interbank was around K5.51 and K5.55 level at 16:00 CAT yesterday [Monday], compared to Friday’s K5.47 – K5.51 levels,” Standard Chartered Bank daily brief notes.
Citibank also says the local unit closed Monday’s session on the back foot, having breached key support level of K5.50 against the US dollar.
In its daily market commentary, Citibank says the local unit opened the session trading at K5.52 buying and K5.54 against the US dollar selling on the interbank market on Tuesday morning and was expected to track the rand’s performance in the absence of significant flows.
External economic pressure again? Just like during the early seventies when copper price fell and oil price rose. Our earnings from exports reduced while spending more to import.
The mines may lay off some workers at a time we want more of our people employed. Thanks to First Quantum Minerals for their stance that they will not lay off any.
PF please do something \about our weak kwacha.Focus on the economy and not by-elections please
I’ve heard of thinking outside the box but do you really think PF is capable of removing focus from by elections to the economy? I am yet to be surprised by this government. I predict the Kwacha will be trading at K7.99 by the end of next year.
@ex moma
good point….sad but factually true
Yakosa
What do you expect under Ukwa?
NO absolute hope for Zambia
The ZMK is likely to continue slipping against the USD because of the US Federal Reserve policy of Quantitative Easing. All currencies have fallen against the USD since the program began. The only option to hedge against losses is to enter into somewhat forward contracts.
Yes PF , do some thing about this bad trend.
Peace and Prosperity to Mother Zambia.
The exchange rate today is 5.5926 @ Barclays and somebody is claiming the economy is growing,where?
Sata is quiet because he is busy sking if its possible to remove more zeros.
Lol…there are no more zeros to remove. He has to move the decimal points to the left….hahahaha.
Me personally I believe that our currency is actually overvalued.Does the current exchange rate really reflect the dynamics that are inherent in a fully fledged capitalist market economy?The answer is a categorical NO.Its full of market distortions eg Why should you have the Highest fuel costs in the region when your currency is stronger than the Rand,Pula etc.?It doesn’t make sense.Prices in Zambia were supposed to be the lowest in kwacha terms since the cost of importing products is relatively less as compared to our neighbours.
On the issue of the mines failing to keep their labour force,the answer is very easy,devalue the kwacha by say 25%,this will translate in their kwacha earnings going up by the same margin and they can even employ more.
No hope for this govt.I’m worrying.No wonder they’ve named Lusaka studiam- Caborn disaster.Carbon in Zambia?Ha ha ha kambwili Chiwelewele sure.I’m disappointed with our govt.Ba Sata can u please bring Magande.I see something wrong in Chikwanda.please don’t jst keep quiet when things are going bad. Kwacha can’t depreciate like that.
What causes Kwacha to drop, I mean what is the relationship between the exchange rate and the Interest rates perhaps?
Thanks
Stop trolling and grow up don’t you have a PHD and ACCA idio’t?
Mushota you have a Phd research for yourself
Please Mr sata concentrate on things which are productive which will generate the money and then use the money for projects do not just keep on spending at the rate the country is going possibility of going back to the 1980s of suffering of kaunda era are very high. Marry the projects with money generated in the economy. The PF should have thinktanks to decide the project which will help the economy to have sustainable growth. president kaunda made similar mistakes he built a lot of infrastructure which where not sustainable and made the country bankrupty. Mr president people loves you please thinkmore about what you are doing to the economy. God bless you shalom
Politics of personal destruction is the only focus of this govt so i bet economics and all its exchange rate mechanisms and jargon is like Greek to these PFools.The only economics they know is salaula trade.
Let’s pray that projects govt have embarked on won’t turn into white elephants.