LUSAKA, March 26 Zambia's kwacha fell nearly 2
percent against the dollar on Wednesday on increased demand from
corporates taking advantage of the currency's strong gains at
the start of the week to honour import payments.
By 1351 GMT the kwacha was trading at 6.23 percent to
the dollar after ending Tuesday's session at 6.11, pulling
further away from Monday's near two-week high of 5.86.
"The recovery was never a sure bet, it's an uneven recovery.
The kwacha, like (South Africa's) rand is exposed to two-way
risk," said Johannesburg-based Rand Merchant Bank currency
analyst Nema Ramkhelawan-Bhana.
"So we're still dealing with the variability in the copper
price, the level of export earnings feeding into the market to
accommodate corporate demand; that imbalance in liquidity which
is a key driver of the kwacha movements in the local market."
A currency dealer with a commercial bank in Lusaka said
corporate buyers who had held off buying dollars at last week's
lows around 6.3-6.4, were now coming in to take advantage of the
now relatively cheaper exchange rate.
Traders said Wednesday's volatility had little to do with
news that the Zambian government would meet fixed-income
investors in the US and the UK from March 27 ahead of its
potential return to the Euro bond market. [
Dollar supply should improve in the coming week as month end
export payments came into the system, one trader said.
In a market note, First National Bank said global sentiment
remained generally in favour of the kwacha, with the dollar
trading weaker against a basket of currencies.
"Nevertheless, volatility is expected today as market
players do not want to be caught on the wrong side of the
market," FNB added.
Zambia last week lifted a ban on the use of dollars for
domestic transactions as authorities sought to ease pressure on
Finance Minister Alexander Chikwanda said the Bank of Zambia
was revoking 2012 and 2013 regulations that required domestic
transactions to be quoted and paid for in kwacha and gave the
central bank authority to monitor foreign currency transactions.
(Reporting by Chris Mfula and Xola Potelwa; Editing by Stella