Kwacha ends lower, weekly rally intact

By BUUMBA CHIMBULU

THE Zambian kwacha slipped against the United States dollar on Friday but still posted its fifth consecutive week of gains, buoyed by favourable market sentiment and strong copper prices.

According to Bloomberg data, the local currency depreciated by 0.32 percent during Friday’s trading session to close slightly above K17.50 to the US dollar.

The data showed that Friday’s losses did not, however, prevent the kwacha from recording its fifth straight weekly gain against the USD.

“The kwacha is expected to remain supported this week amid favourable copper prices and sentiment,” it stated.

And market analysts at Access Bank Group indicated that the performance came amid shifting dynamics in global foreign exchange markets, where the US dollar weakened against major currencies following reports of an interim agreement between the United States and Iran to reopen the strategically important Strait of Hormuz.

The development eased fears of disruptions to global oil supplies and reduced concerns over a potential energy-driven surge in inflation.

Falling oil prices and lower US Treasury yields also prompted markets to temper expectations of further interest rate hikes by the US Federal Reserve, putting additional pressure on the greenback.

However, analysts cautioned that uncertainty surrounding the agreement could limit further dollar weakness, as the deal has yet to be formally signed and concerns over persistent US inflation remain.

Meanwhile, the African Export-Import Bank (Afreximbank) received a boost after global ratings agency S&P assigned the institution a BBB+ investment-grade rating with a stable outlook.

The assessment aligns with Moody’s investment-grade view and comes months after Fitch downgraded the lender to junk status over concerns related to sovereign debt restructuring exposures in countries including Zambia and Ghana.

 “S&P’s decision reflects confidence in Afreximbank’s diversified portfolio, noting that nearly 80 percent of its loan book is concentrated in private-sector lending, reducing its reliance on preferred-creditor protections,” Access Bank analysts said.

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