Excessive US dollar Supply Revives Kwacha.
INCREASED United States dollar supply by exporters on Monday helped resuscitate the Kwacha that had opened the trading session on a low note, trading at about K10.20 and K10.25 on bid and offer respectively, a financial market player says.
According to Cavmont Bank, the local unit on Monday looked set for another disappointing performance against the United States ( US) dollar on Monday as it opened at K10.20 and K10.25 but managed to make a remarkable come- back after increased supply from exporters and sellers.
“ The Kwacha on Monday closed trading at K10.05 and K10.10, K0.15 stronger than the day’s opening rate,” the bank says in its market report.
Similarly, Zanaco in its daily treasury newsletter says the Kwacha is expected to remain strong in the coming days as corporates convert dollars to meet tax and monthend obligations.
On Monday, the Kwacha turned strong as local currency liquidity cut appetite for the dollar on the interbank market amid an increase in dollar supply.
The bank, however, says the local unit opened trading off to a weak start, opening 10 ngwee weaker than its previous at K10.20 and K10.25 and proceeding to an intra- day low of 10.22 and K10.27.
“ Activity from corporates and money market liquidity are likely to drive currency movements in a still jittery market,” the statement reads.
On the regional front, Kenya’s shilling was steady on Tuesday ahead of a central bank rate- setting meeting later in the day to trade at 101.25 and 101.35 to the dollar, the same as Monday’s close, while South African rand strengthened early yesterday to trade at 13.975 per dollar.
Meanwhile, copper and nickel price on the international market steadied on Tuesday as the dollar softened and China’s property boom also lent support to the prices.
Three- month copper on the London Metal Exchange erased early losses to edge up 0.1 percentage point to US$ 4,782.
Prices are within reach of fresh highs above US$ 4,794, a three- week top hit last week.