…as the United States ponders on hiking interest rates, posing a risk on currencies
By BUUMBA CHIMBULU
SUSTAINED demand for the hard currency on the local market has seen the Kwacha to lose further ground against the United States dollar, as copper fell for a second day while the Federal Reserve signaled interest-rates hikes.
The Kwacha has con- tinued to weaken further against the United States dollar in its trading sessions
The first week of trading in the New Year has been characterised by minimal supply from corporates adding some slight pres- sure to the Kwacha which is currently trading around K16.790 per dollar.
Interim trends, accord- ing to the financial players, suggest that the rate may continue on this trend ow- ing to tight supply of dol- lars.
“On Wednesday, the Kwacha tracked other cur- rencies which traded on the back foot of a broadly bullish U.S. Dollar. Sus- tained demand for the hard currency on the local mar- ket saw the currency pair lose further ground against the greenback,” according to the Zambia Industrial Commercial Bank (ZICB).
Meanwhile, Access Bank Zambia indicated that cop- per fell as much as 0.6 per- cent to US$9,637 a metric ton on the London Metal Exchange before trading at US$9,648.50 in Shanghai
It stated that copper fell for a second day as the Fed- eral Reserve signaled inter- est-rate hikes may be more aggressive than expected, hitting broad market sen- timent and clouding the
demand outlook for com- modities.
Fed moves affect emerg- ing markets as United States interest rate hikes tend to drain capital away from the higher-yielding but riskier markets, weigh- ing on their currencies.
Local investor focus was on a purchasing managers’ survey due on Wednesday and reserves figures expect- ed on Friday.A “very tight” job market and unabated inflation might require the Federal Reserve to raise in- terest rates sooner than ex- pected and begin reducing its overall asset holdings.
In a document released on Wednesday that markets took as decidedly hawkish, the minutes from the De- cember 14-15 policy meet- ing showed Fed officials uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “well into” 2022
