The kwacha has depreciated against major currency convertibles to breach the K12 per dollar psychological barrier for the second time this year.
But the local currency looks set to regain its strength ahead of the Christmas break as early indications suggest it may appreciate.
According to financial market players, the kwacha breached the K12 psychological barrier per dollar to trade above K12.00 on account of continued heightened demand for dollars on the local market with correspondingly limited supply of the greenback.
The local unit was seen trading at a market average of K11.77 and K12.00 by lunchtime, Monday, for bid and offer respectively, according to the Bank of Zambia, down from an average of K11.60 per dollar in early November.
The last time the kwacha depreciated to hit the K12 per dollar barrier was in September this year, where it traded at an average K11.81 and K12.04 by the end the third quarter.
“On Thursday (November 29), the kwacha breached the $1/K12.00 barrier following a wane in supply from corporates as well as on the interbank. The local unit began the day trading at K11.90/K11.95, a level it maintained until mid-morning, when it was later seen trading at K12.02/K12.07. The mismatch in demand and supply levels continue being the major drivers on the currency pair in the short to medium term,” Cavmont stated in a market report.
And check around several bureaus in Lusaka found the kwacha had touched the K12 per dollar mark.
The local unit traded at K11.85 and K12.08 per dollar for bid and offer respectively at Golden Coin Bureau, Cairo Road branch, while Unifinance quoted at K11.80 and K12.03 per dollar at by lunchtime yesterday.
But the kwacha looks set to regain its strength ahead of the Christmas break as early indications suggest it may rebound and appreciate.
FNB Zambia explains that corporate entities will be looking to convert dollars into local currency to meet their usual obligations.
“Today (Monday), marks the first trading day of December and it might be a quiet day, with light trades. However, we could see a hike of conversions by the end of this week as corporates strive to meet supplier obligations as they prepare to go on their December break,” stated FNB in its daily treasury newsletter.