THE kwacha has continued on a depreciating trend, breaching the K11 psychological barrier at the end on Tuesday’s trading. The current trading rate of the local currency against major convertibles was last seen in April, 2016.
“The local unit continues to slip against the greenback. At its climax, the mid-rate reached USD/ZMW11.025 in yesterday’s trading session – levels last seen in April 2016. As sentiment continues to dampen, the local unit has had no firm footing against a basket of currencies,” FNB Zambia has stated in its daily update.
“Due to these elevated levels, a sense of panic has embraced the market as the resistance level of USD/ZMW remains unknown. Tuesday’s trading opened at 10.900/10.9500 and closed at 11.00/11.050. We are of the view that the kwacha will continue on a bearish note.”
The central bank continues to be active via Open Market Operation (OMO), it stated, as appetite for OMO increased significantly with bids amounting to K830 million in the afternoon session with bids ranging between 9.5 per cent and 9.75 per cent.
“There were no rejected bids. With most funds in OMO, market liquidity has reduced significantly with just over ZMW 622 million in circulation. With the reduced market liquidity, the weighted average interbank rate increased to 9.6 per cent,” stated FNB Zambia.