The kwacha continued to depreciate sharply against major currency convertibles to sink and crash through the K14.00 per dollar psychological barrier, the weakest since November, 2015.
According to financial market players, the kwacha has maintained a weak position, depreciating to breach the K14.00 per dollar, an over three-year high, losing value from a position where it traded at around K13.00 just two weeks ago.
The local unit was seen trading at a market average of K14.00 and K14.05 per dollar by end of day, Friday, for bid and offer respectively, according to the Bank of Zambia, compared to trading at K12.87 and K12.92 barely a fortnight ago.
This means that the local currency has lost around eight per cent in its value in a space of 14 days.
Even within just a five-working day week, the local unit drastically depreciated from opening at K12.96 and K13.01 per dollar for bid and offer, respectively, by May 13, to closing out the week on K14.00 and K14.05 per dollar by May 17.
The kwacha’s continued loss in value comes amidst slashed economic growth projections by both the World Bank and International Monetary Fund (IMF) for Zambia this year, and is continuing to show little sign of improvement in the near-term.
Financial market players explained that dollar supply had continued to remain extremely limited amidst heightened demand for the greenback by importers, causing the mismatch.
“The currency weakened further yesterday (Thursday), reaching K13.60 — close to an all-time high. Even though activity was less than it has been of late, it was easy to see that supply was less than importer demand. As the day came to a close there was no indication of respite going into Friday. We expect the local unit to continue losing ground against the greenback, albeit at a slower pace,” FNB Zambia stated in its daily treasury newsletter, released, Friday.
And a check at some bureaus revealed that local unit had breached the K14.00 per dollar psychological barrier for the first time since November, 2015.
The local unit traded at K13.95 and K14.23 per dollar for bid and offer, respectively, at Golden Coin Bureau.
If the kwacha continues depreciating at this rate, it looks set to breach the all-time high of K14.63 per dollar recorded by the end of the first week of November, 2015.