Kwacha weakens further against US dollar amid tight supply, global trade tensions

The Zambian kwacha continued its defensive stance on Friday, extending its losses to a fifth consecutive session against the US dollar.

The local currency closed just above the K28.20 per dollar mark, registering a 0.20 percent decline.

The Kwacha is expected to remain under pressure in the short term, as demand for dollars continues to exceed supply.

Absa Bank’s daily market commentary indicated that the currency’s weakness is driven by an ongoing imbalance between the supply and demand for dollars, which has resulted in constrained liquidity in the market.

The interbank market opened at K28.17/K28.22 per US dollar, depreciating slightly by the end of the session to K28.20/K28.25 on the bid and offer, respectively.

Meanwhile, the US dollar continued to slide against major currencies, largely due to escalating trade tensions between the US and China.

These tensions have dampened investor confidence in the dollar, pushing it to its lowest level in a decade against the Swiss franc and a three-year low versus the euro.

Analysts are targeting the USD Index to reach 99.00 this week.

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