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The Zambian kwacha, which has come under sustained pressure against the US dollar in recent sessions, is expected to hold steady this week, buoyed by corporate dollar sales ahead of value-added tax (VAT) payments.
Analysts at Access Bank Group said tax-related hard-currency inflows are likely to ease pressure on the local unit.
“There is value-added tax this week, which should help ease the selling pressure on the local unit,” the bank noted.
However, Absa Bank offered a more cautious outlook, warning that the kwacha may remain under pressure in the near term due to limited foreign currency inflows and strong demand for the greenback.
On Friday, the kwacha opened interbank trading at K26.770/26.820 per US dollar and later weakened to close at K26.850/26.900.
“The decline was driven by heightened demand for the dollar amid subdued supply,” Absa said.
Internationally, the US dollar gained strength on Friday, supported by upbeat US economic data and renewed optimism over global trade, which also lifted Treasury 2-year yields and equity markets.
US import prices rose by 0.1 percent in April, while consumer 12-month inflation expectations jumped to 7.3 percent from 6.5 percent, according to the University of Michigan.
Former US President Donald Trump also made headlines, stating that American officials would send letters to foreign governments outlining US business conditions.
He further reported progress in US-EU trade negotiations, noting that both sides had recently exchanged documents.
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