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The Zambian Kwacha is expected to remain steady against major convertible currencies in the coming days, supported by increased foreign currency supply from corporate tax obligations.
As companies convert their earnings for tax payments, the Kwacha is likely to trade on the offensive due to the projected rise in foreign currency inflows.
During Thursday’s market session, the Kwacha experienced minor losses against the U.S. dollar, with demand outstripping supply, according to the daily market update from Absa Bank.
“At 08:30 am, commercial banks in Lusaka quoted the local unit’s interbank rate at K26.400/26.450 on the bid-offer, where it traded for most of the day,” the report noted.
Read more: Kwacha drops slightly against US dollar, fears persist over increasing demand by corporates
However, the currency pair edged lower by 2.5 ngwee later in the day, closing at K26.425/26.475 on the bid and offer, respectively.
Despite these slight losses, tax conversions by corporates are expected to stabilize the Kwacha as foreign currency inflows increase.
Meanwhile, the South African rand strengthened against the U.S. dollar on Thursday, following data showing a slight decline in U.S. inflation for September, which kept expectations alive for a Federal Reserve interest rate cut next month.
The rand closed at 17.53 against the dollar, marking a 0.7 percent gain from its previous close.
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