The kwacha has appreciated to hit K9.67 per dollar following continued supply of dollars on the financial market in response to corporates’ provisional tax obligations, according to financial market players
The local currency has appreciated below the K10 per dollar mark to hit these levels for the first time in nearly two months when it last traded at around K9.53-K9.65 towards the end of April.
FNB stated in a daily treasury newsletter that the kwacha’s strength had been buoyed by corporates’ need to settle provisional tax obligations, which fell due, Tuesday.
“After the long-weekend, the kwacha opened the new month on a high. With many players offloading their US dollar positions, supply on the market for the greenback is on the rise while demand is dropping. The market opened Wednesday [July 4] at K9.95/K10.00 and closed at K9.88/K9.93. We are of the view that the kwacha will continue to appreciate due to provisional taxes falling due on July 10, 2018. Trades below K9.90 are to be expected,” FNB stated.
“The kwacha has continued its strengthening streak as dollar supply remains high. We remain strongly bullish about the currency. This view is secured around the foundation of tax obligations for many large corporates. We may also see this appreciation trend breaking the K9.65 support in the short-term as supply continues to be injected into the market.”
FNB added that the kwacha’s outlook for the remainder of this month looked bullish.
“After opening at K9.75/K9.80, the ZMW improved to close at K9.67/K9.72. We are of the view that the local unit will continue on this bullish path into the new week with resistance firmly at K9.85,” it stated in a follow-up treasury update released yesterday.
And Cavmont Bank noted in its market report issued, Monday, that the local unit is likely to post further gains in view of continuous dollar supply from corporates.
“The kwacha has in recent days posted massive gains following an increase in supply from sellers. Current trends seem to indicate that the US dollar is likely to have some support around $/K9.70 mark, with a break below this level leading to further gains in the local unit,” stated Cavmont.
Meanwhile, a check around Lusaka-based bureaus found the kwacha had significantly appreciated to well below the K10 per dollar mark in response to the supply-demand factor.
The kwacha traded at K9.80 and K9.90 per dollar for bid and offer, respectively, at Ace-FX Bureau, while the local unit was quoted at K9.75 and K9.94 per dollar at Golden Coin Bureau by lunchtime yesterday.