THE kwacha yesterday closed the week’s trading weaker at K13.10, losing its strength further as the local currency continues to come under extreme pressure to thinning supply of the US dollar.
Despite opening the day’s trading at an average rate of K12.70, the kwacha failed to hold ground as it tumbled by midday to break the K13 level and close trading much weaker than anticipated.
It’s depreciating trend, which began on Thursday when it closed trading at K12.78 from the day’s opening rate of around K12.60 per US dollar, has been described as exaggerated by First National Bank.
“Like most of Africa, Zambia is going through a difficult period. Concerns about the global economy, falling commodity prices and domestic developments continue to keep the local unit under pressure. The kwacha lost close to 200bp in yesterday (Thursday)’s trading session from an opening rate of K12.600 to a close of K12.785,” stated FNB in its daily treasury market update. “Although mostly in line with general market losses, the slightly exaggerated move was aided by a lack of dollar supply and increased in the demand for dollars. The absence of these flows makes it difficult to see how the slide will be stemmed.”
The further strain on the kwacha is signaling continued increases in the cost of living, since the country is a net importer of most basic commodities.