THE Kwacha has continued its positive performance tracking other currencies which were generally bullish against the United States dollar, Zambia Industrial Commercial Bank (ZICB) has said.
ZICB said the correction in currency pair which opened at 15.320/15.370 was partly due to the hard currency being overbought.
“The Kwacha closed at 15.180/15.230 and is likely to post further gains on the back of mid-month conversions by corporates to cover mid-month obligations.
“Market liquidity is currently at K1, 079 million, compared to K1, 056 million the previous day,” ZICB said in its daily market update.
The United States dollar fell on Thursday amid expectations that the Federal Reserve would cut interest rates further, after slashing them by 50 basis points last week in an emergency move to shield the economy from the effects of coronavirus.
ZICB indicated that the Fed had mentioned the epidemic 48 times in its latest Beige Book report, suggesting policymakers were highly concerned about the economic damage of the disease.
“Money markets were pricing in another 25 basis points cut from the current one percent to 1.25 percent range at the next Fed meeting on March 18-19 and a 50 basis points cut by April.
“As a result, the dollar remained close to the two-month low of 1.1214 it reached against the euro on Tuesday, last trading 0.4 percent lower at 1.1175,” said the Bank.
The euro, said the Bank, also benefited from traders unwinding their carry trade.