Experts forecast weaker kwacha

MARKET experts have forecast a weaker kwacha, forecasting a K10.20 resistance level in this week’s trading.

The local currency is fast losing ground, after touching the K9.20 a couple of weeks ago, as demand for the dollar t persists.

“The US dollar continues to strengthen among a basket of currencies. Generally, the market is in ‘risk-off’ mode as investors feel the risk-return trade-off has been diminished in risky assets as rates in the US rise and the tone there remains hawkish. The kwacha has not been spared, although in all likelihood a fair amount of weakness is idiosyncratic,” FNB Zambia has stated in its daily market update issued yesterday.

“The local market has held a bearish sentiment and reduced supply has exaggerated moves. The weakening trend is quite likely to spill over from last week.”

Demand is expected to ease towards the end of the week.

“We expect to start the week at bid-offer rates of 10.070-10.135. As the week progresses, demand will naturally subside and supply improve. Eyes will now be firmly set on 10.200 as a resistance level,” FNB Zambia stated.

“The bond market is predominantly offered as kwacha bond-holders’ funding positions through carry trades consider USDZMW moves.”

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