The Bank of Zambia yesterday again halted the kwacha’s depreciation by offloading dollars on the market, causing massive swings on the foreign exchange market.
Last week, the kwacha strengthened by about 11 per cent to close the week around K11.56, its strongest level since October 28, on the backdrop of BoZ offloading a lot of dollars onto the market to stem the local currency’s free-fall.
The embattled currency opened this week averaging K11.95 but fell midday to around K12.50.
Yesterday, the local hit an intraday low of K13.31 against the US dollar before the BoZ was back in the market selling the dollars to stem its fall.
“It goes without saying that the Central Bank is doing everything in its power to curb kwacha weakness,” FNB stated in its daily newsletter. “However, with local sentiments still looking gloomy [copper at US$4,600 a tonne and power shortages], the market remains nervous.”
And Finance Bank said a combination of high demand for dollar and falling copper prices continue to put pressure on the local currency.
“The central bank intervened and the kwacha strengthened K12.41 and K12.43 where it closed [yesterday],” according to Finance Bank daily treasury newsletter.
Meanwhile, three-month copper on the London Metal Exchange dropped 1.09 per cent to US $4,651 per metric tonne, a level not seen since June 2009.