15 January 2013

Zambia: Kwacha Continues Falling

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American Dollar

THE Kwacha has continued to lose ground against the greenback and is expected to be under pressure as continued dearth in supply will leave the Kwacha with very little support against a relatively strong demand.

According to the Zanaco daily newsletter, the local unit traded pretty flat around KR5.260/5.280 during much of the day's session on Friday but eventually closed trading 10 Ngwee weaker at KR5.270/5.290 on the bid and offer, respectively.

The report said inter-bank trading on Friday was characterised by thin trading with minimal activity seen on the corporate front.

Intraday, the Kwacha continued to lose ground against the greenback and saw the local unit open Friday's trading unchanged from Thursday's closing level of KR5.260/5.280.

Further, the report said the local unit was expected to continue to come under pressure as a continued dearth in supply has left the Kwacha with very little support against relatively strong demand.

The Kwacha is expected to be range bound in the near term and trade between K5.250 and K5.320 on the interbank.

On the money market, Friday saw market liquidity continue trending downwards, as it fell below the KR2,000 million barrier to end the day at KR1,936.8 million from the previous day's close of KR2,206.2 million.

The volume of interbank funds traded by commercial banks increased to KR186.0 million from KR174.5 million and the weighted average interbank lending rate rose to 7.8 per cent from 7.0 per cent.

The report said with increased money market activity, the overnight interbank lending rate was anticipated to oscillate between 7.35 per cent and 7.9 per cent in the near term.

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