Citibank says the market is expected to witness increased United States dollar supply as portfolio investors invest in the bond auction.
“The bond auction this week may attract portfolio investors and hence increase the supply side of dollars in the market… Higher interest rates could help ease the pressure off the local unit as this may attract portfolio investors,” the bank says in its market commentary. Citibank says the Kwacha, which on Tuesday traded in a stable band, between K6.68 and K6.70 at bid and offer, slightly firmer from the previous day’s lows of K6.71, is expected to appreciate as portfolio investors release the dollar on the market. The bank also notes,
“Demand for the greenback seems to have stalled waiting for clues on the next direction the currency will take. Market players are also sceptical at these high levels and are treading carefully.”
Similarly, Zanaco Bank says the local currency is in the short term expected to trade on the upward trend owing to dollar supply from corporates with trading expected to be between K6.58 and K6.68 on the interbank.
The bank also says a healthy supply of the dollar from exporters and subdued demand both on the interbank and with corporates on the day saw the local unit touch an intra-day high of K6.66 and K6.68.
“Tuesday`s trading session saw the Kwacha strengthen against the greenback, buoyed by increased dollar inflows from corporates.
The local unit opened the day K0.20 weaker from Monday’s close at K6.71 and K 6.73,”the bank says in its daily treasury.
Zambia Daily Mail