(3 minutes read)
- A First National Bank (FNB) attributed the Zambian currency Kwacha’s appreciation to a sudden US dollar supply and inflows into Zambia of dollars coming from off-shore market players. Kwacha appreciated by about 2% against the greenback (US dollar) on Wednesday 8 December 2021 trading session, to close at K17.17 from K17.52 at the midpoint.
- Volumes ticked up on both sides of the market. The US dollar supply was higher as corporations closed off dollar positions. However, market fundamentals remained unchanged.
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First National Bank (FNB) attributed the Zambian currency Kwacha’s appreciation to a sudden US dollar supply and inflows into Zambia of dollars coming from off-shore market players. Kwacha appreciated by about 2% against the greenback (US dollar) on Wednesday 8 December 2021 trading session, to close at K17.17 from K17.52 at the mid.
Volumes ticked up on both sides of the market. The US dollar supply was higher as corporations closed off dollar positions. However, market fundamentals remained unchanged. The local unit’s movement was purely sentiment driven. Offshore investors were largely responsible for offloading dollars on the local financial market.
The news that Zambia had finally reached a Staff-Level Agreement with the IMF would also have led to appreciation of the local currency. Offshore flows were supplemented by onshore supply from some corporates looking to meet local currency obligations.
The names of the offshore players who have flooded the Zambian market with dollars following the signing of the staff level agreement with the IMF has not been made public.
On Friday, December 3, the Zambian government reached a Staff-Level Agreement on a programme under the IMF’s ECF that envisages provision of financial support of US $1.4 billion over a period of three years.
