THE kwacha’s massive depreciation continued yesterday, with the local currency collapsing to K9.60 on interbank before retreating to K9.50, its all-time worst.
By mid-day yesterday, the kwacha was averaging K9.31 and K9.49 for bid and offer against the US dollar on interbank while some Lusaka bureaus quoted the embattled currency at K9.90 against the US dollar.
On the same interbank market, the commercial banks were buying a British pound at K14.16 and selling it for K14.52, while the euro was being bought K10.43 and selling for K10.70, with the South Africa rand being quoted at K0.68 for buying and selling at K0.70.
From October 2014 to date, the kwacha has depreciated by K4.50 against the US dollar in a single year, the biggest loss in the country’s history. The worst depreciated previously recorded so far in a single year was K1.50 per dollar.
“In as much as many currencies have plummeted against the dollar, there is need for the central bank to put in measures to curtail this free fall,” said a market source. “We know that banks have a master plan to save the kwacha but those government officials in charge of operations of Bank of Zambia are not interested.” Other market experts say the level of demand for foreign exchange was unprecedented.
“It is basically growing mismatch between demand and supply,” a market sources said anonymously. “This level of demand for forex [foreign exchange currency] is unprecedented while supply remains subdued.”
The source said Bank of Zambia’s intervention through selling of foreign currency remains constrained as any intervention would result in the “wastage” of available foreign currency. “It’s like throwing your hard-earned dollars down the drain,” said the source.
“This level of appetite for foreign currency is exceptional.” And according to Finance Bank, the kwacha has continued to be weakened by declining copper prices and low dollar inflows.
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