CALM is returning in the foreign exchange market that has been volatile.
The calmness is due to intervention by selected players offloading their United States dollar in view of the high rates, a financial market analyst says.
The weakened Kwacha, which on Monday moved from K12.40 to K12.20, is expected to post a further appreciation during the week as mining firms and other players enter the market, according to First National Bank (FNB).
In its daily newsletter, FNB says the Bank of Zambia (BoZ) and the government interventions have also boosted confidence in the market.
Last week, President Lungu assured that Government has no intention of re-introducing foreign currency controls despite the Kwacha being fragile, while the BoZ has continued to put in place monetary measures to rescue the local unit.
“We believe the currency is overdone at the current levels and the interest taken by stakeholders seems to be calming the markets.
“Further Kwacha appreciation is expected in the week ahead, which could see mining firms also come into the market in order to take advantage of the high rates.,” the bank notes.
Trade on the interbank was yesterday (Tuesday) projected to be in the range of K11.90 and K12.20 for bid and offer, with a bias towards a strong Kwacha.
FNB also notes that despite very little dollars flowing into the market, the Kwacha has witnessed an upward trend.
On the commodity market, copper price on the London Metal Exchange was flat yesterday as a week-long holiday in China blunted interest, while comments by the chief of commodities giant Glencore, flagging looming supply cuts, failed to spur buying.