The Kwacha is likely to depreciate even further before the end of this year, falling to an average K14.50 per dollar, amidst strong demand for the greenback by both offshore and local players, market data shows.

The Kwacha sharply depreciated to hit the K14.00 per dollar psychological barrier by mid-November for the first time in six months, owing to a resumption in high demand for the greenback on the local market.

In the wake of heavy electricity and fertilizer imports, the local unit quickly lost value to hit the K14 per dollar mark after holding steady at an average K13.29 per dollar by the end of last month.

In a Cavmont Bank market report released, Friday, the Kwacha was quoted as having significantly depreciated going into the final week of this month to an average K14.30 per dollar from the K14.00 level 10 days ago, representing a 2.4 per cent loss, and is likely to lose more value.

“The kwacha moved further lower against the US dollar on Thursday following strong demand from off-shore players. The local unit began the day trading at K14.10/K14.15, but was later seen trading at K14.30/K14.35 by mid-morning. By noon, however, the kwacha was seen being quoted at K14.20/K14.25 following an improvement in supply on the interbank. In terms of corporate activity, this was largely flat as most players were cautious. With the local unit now having breached the $1/14.00 mark, a break away from this level is likely to see the local unit move further down in the short-term, but this will be capped by weak demand as well as tight liquidity in the money markets,” Cavmont stated.

And FNB Zambia stated in its Treasury market update that market sentiment towards the Kwacha remained negative.

“The local unit continued on its weakening trajectory yesterday (Thursday) as sentiment remains poor. In the morning session, we saw a break above K14.30, with USD/ZMW trading at K14.27/K14.32 at its highest. By midday, the central bank had intervened to curtail the rapid depreciation of the kwacha, which closed lower at K14.19/K14.24. As we come to the end of the week, we don’t expect much movement in the rate,” stated FNB.

The local unit ended trading at an average K14.32 and K14.37 per dollar for bid and offer, respectively, by the close of business, Friday, according to the Bank of Zambia (BoZ).