The kwacha on friday closed trading on a very weak footing following the World Bank’s cutting of Zambia’s Gross Domestic Product (GDP) growth forecast from 3.5 per cent to 3.3 per cent.
The local unit closed the week on “a rather sour note”, depreciating amongst a basket of currencies, FNB Zambia has stated in its market report.
Apart from the World Bank’s downward revision of the growth projections, the kwacha, according to FNB, lost its strength due to strong dollar demand, which is likely to see the local unit on depreciating trend.
“The market on Thursday closed at K12.400 on the right-hand side – at levels last seen in October 2018. ZAR/ZMW also crossed 0.880 at the end of the trading day. If the local unit continues to trade on the back foot against the dollar, it could have an impact on the MPR and inflation rate. We are of the view that without any significant dollar flows into the market, a bearish kwacha will continue. A break of 12.500 is likely…,” it stated.
For the Treasury bill auction, it is said to have been poorly subscribed, despite over K1.5 billion in circulation.
With K950 million on offer, successful bids amounted to just K290 million. There was a slight uptick on yields across all the tenors, the most notable being on the 182 bill, which increased by one per cent, FNB has said.