Maravi

Kwacha shortage hits Lusaka bureaus

Kwacha shortage hits Lusaka bureaus
Written by Fridah Zinyama and Joan Chirwa
Wednesday, November 05, 2008 5:59:23 AM

A kwacha shortage yesterday hit selected business houses in Lusaka, forcing some of the bureaus de change to close before time.

But a financial market expert has explained that the shortage of the kwacha in some bureaus could have resulted from over-buying of dollars or their unwillingness to further purchase the foreign currency since the kwacha has started posting gains against the dollar.

A check revealed that financial-related businesses like Western Union and some bureaus de change had no kwacha available to pay their clients.

Western Union branches in town, Northmead, Arcades and Manda Hill did not have enough kwacha to pay their clients.

“People started shying away from buying the dollar when they saw that the kwacha had appreciated against the dollar,” an expert noted.

The kwacha appreciated against the dollar by about K400 and is currently trading at an average of K3,800 and K4,300 for buying and selling in most of the bureaux.

On the interbank market where banks borrow and lend to each other, the kwacha appreciated by more than K800.

And according to the Standard Chartered daily newsletter, the kwacha appreciation was mostly driven by interbank players who sold dollars on the market.

“This was also exacerbated by the mines and some government ministries who also sold the kwacha lower,” the bank stated.

The Central Bank tried to intervene around K3,800-K3,830 and bought dollars, but this was not enough to curtail existing supply as players' still dumped dollars on the market to touch a low of K3,710-K3,730 before market retraced up to its closing levels.

Market froze around K3,710-K3,730 as players only showed levels and the kwacha is expected to trade within a wide band of K3,900-K4,300 on Tuesday.

Labels: CURRENCY, FOREX, KWACHA

posted by MrK @ 6:00 AM