THE kwacha has continued to lose ground against major convertibles on the foreign exchange market, trading at a low of between K17.30 and K17.64 for buying and selling respectively on interbank by midday yesterday.

This was quick loss after opening at between K17.00 and K17.34 per dollar for buying and selling respectively.

This further depreciation comes on the backdrop of thinning dollar supply, as the local currency lost around 7.18 per cent in last week’s trading to close at a historical K17.17 per dollar, with FNB Zambia branding it the toughest trading week for the local unit.

“Last week was one of the toughest weeks for the local unit, which shaved off circa 7.18% to close the week at a historical high of 17.17. Much of the loss in value can be attributed to the economic impact of the coronavirus. The virus has continued to cause a risk-off environment as most investors start to pull out of emerging market economies and move into the much more secure safe-haven assets (gold and the US dollar). Adverse sentiments have equally put the local unit under pressure. Eurobonds have not been spared as yields soar to record levels – the yields on the 2022 for example are now trading at 51%/45%,” FNB Zambia stated in its daily market update, Monday.

It has expressed doubt that the local currency will get some relief in this week’s trading.

“With markets sharply lower, we hardly expect any reprieve on the currency this week. The rand opens the week much lower at 17.70. If corporate flows offer support, we could see the currency stem the easing. We could see trades above 17.50,” FNB stated.

On the bond market, Friday’s bond auction saw poor subscribed with K369m allocated out of the K1,100bn on offer on the back of tight liquidity conditions.

“Yields on the 2 and 7-year tenors remained unchanged while the 15 year edged higher by 100bps. Risk appetite was skewed towards the shorter dated paper with 98% of the proceeds at 2 the year point,” stated FNB Zambia.