JOHANNESBURG, July 5 (Reuters) – The Zambian kwacha, which
rose to a near two-month high this week, is expected to
strengthen further ahead of the payment of corporate tax later
this month, while Kenya’s shilling is seen under pressure after
the central bank cut its key lending rate by 150 basis points.
ZAMBIA
Zambia’s kwacha is expected to consolidate its gains
against the dollar next week as investors convert dollars into
local currency for the payment of corporate tax due on July 15.
The kwacha rallied to 4,920 on Thursday, its highest level
in nearly two months, compared to Friday’s close of 5,140,
driven in part by a new regulation limiting the use of dollars
in Africa’s largest copper producer.
The regulation came into force on May 18 and prohibits the
use of foreign currency to buy domestic goods and services.
Penalties include up to 10 years in jail.
“Dollar demand has evidently been outstripped by inflows and
the trend is likely to continue in the short term,” one trader
said. “We believe kwacha is now poised to retest 4,800 levels
before we see any meaningful retracement.”
The kwacha has broken below all anticipated support levels,
gaining 7.5 percent in the last four trading sessions from
around 5,300 due to general dollar weakness and a surge in the
price of copper, Zambia’s main export.
Continued…
