Kwacha records 1.2% depreciation

Kwacha records 1.2% depreciation
Written by Joan Chirwa
Wednesday, April 22, 2009 6:06:24 PM

THE kwacha last week depreciated by 1.2 per cent against the US dollar
on mismatch between supply and demand for the foreign currency.

The Finance Bank treasury market update indicates that the local currency opened the week trading at a buy rate of K5,610 and sell rate of K5,630 on the inter-bank market.

There were some US-dollar conversions on Tuesday which saw the kwacha firm to K5,535 and K5,555 levels in intra-day trading, but retreated to close the day at weakened levels of K5,640 and K5,660. The local currency depreciated further on Wednesday to K5,690 and K5,710 and remained largely unchanged for the rest of the week in lackluster trading conditions.

“Despite the recent improvement in the world equity markets and the rising optimism about world economic outlook which has seen copper prices rise by more than 17 per cent this month alone, the kwacha has continued to be under pressure. Copper prices hit a six month high last week closing just above US$4,803 a tonne but this did little to positively influence the kwacha’s levels. It would appear the kwacha is not responding to mere sentiments but actual US dollar flows to establish its levels,” stated Finance Bank. “This week, we are likely to see a stable to bullish kwacha as players trade cautiously.”