Kwacha starts 2017 trades on weak note

Kwacha starts 2017 trades on weak note

By Mike Riley

THE kwacha has started 2017 trading in a weak position against major currencies, continuing its depreciating trend from the end of 2016.

According to market data, the local currency closed trading last week averaging K9.80 and K10.00 for bid and offer against the U.S. dollar on interbank.

In the preceding few weeks, the kwacha had outperformed most major currencies against the dollar after some sell-off from local companies increased the supply of foreign currency.

Cavmont Bank stated in a market report that the local unit had maintained its depreciating trend to open trading in the first week of January at between K9.90 and K9.95.

However, the local currency has continued to trade above the K10 level in most bureaus owing to limited supply of the greenback.

“The kwacha began the year trading above the K9.90/$1 barrier, as the currency pair opened at K9.90/K9.95. Market activity, however, was still largely subdued as most corporates are still on industrial break and this saw the local unit remain unchanged until close of the market,” Cavmont stated.

Although Cavmont stated that the local unit is likely to remain resilient in the short to medium term, with limited movements towards the downside owing to weak demand, most bureaus are quoting it above the K10 mark per dollar.

A check at most bureaus in Lusaka revealed that the kwacha had maintained its downward movement against all major convertibles.

Golden Coin quoted the kwacha at K9.86 and K10.05 against the dollar, and Ace-FX Bureau quoted the local currency at K10.05 and K10.16 per dollar, while Unifinance Bureau pegged the local unit at K9.90 and K10.08 for bid and offer respectively.