THE kwacha on Thursday lost its earlier gains against US dollar, causing some panic buying among market players.
Earlier in the week, the local currency broke the K9.30 barrier to trade around K9.27 on average, the lowest level in a year, but lost some ground in Thursday’s trading to touch K9.40 and K9.45 for buying and selling respectively when offshore players came on the market, according to FNB Zambia’s daily market update.
“In a drastic turn of views on Thursday, the local currency lost some steam against the greenback. Many offshore players came onto the market supplying the local currency, with high demand for the greenback leading to a depreciation of the kwacha to 9.400/9.4500 from 9.275/9.325 at open. These elevated rates sparked some panic-buying among many corporates,” FNB Zambia stated.
By the end of trading, however, the kwacha regained some strength with some slight appreciation.
“Towards the end of the trading day, however, the kwacha regained some steam and appreciated to 9.3800/9.4300 where it closed.
We are of the view that market levels should hold in the same range. With the provisional tax deadline next week, these levels could drop again — possibly leading to an appreciation of the kwacha and a break of 9.350 could be seen,” the update indicated.
Meanwhile, bond markets remained quiet.
“The central bank accepted overnight money at an average rate of 10.51 per cent in a continued bid to reduce overall market liquidity. The overnight rate was little changed at 9.00 per cent. Bond markets remain quiet in anticipation of the primary auction scheduled in a fortnight’s time,” stated FNB Zambia.