By 
The Zambian Kwacha opened the week on a weaker note, pressured by a strengthening United States dollar amid rising geopolitical tensions in the Middle East.
According to market data from Bloomberg, the local unit depreciated by 0.14 percent to close just below the 18.8500 mark against the dollar, reflecting subdued demand and external market pressures.
However, analysts expect the Kwacha to find some near-term support as the market anticipates increased foreign currency inflows ahead of mid-month statutory obligations due on May 10, a period that typically boosts liquidity.
Globally, the dollar firmed against most major currencies as renewed hostilities between the United States and Iran heightened investor caution.
Read more: Zambian Kwacha firms slightly on copper price rebound, risks persist
Reports of attacks on vessels in the Persian Gulf and incidents involving the United Arab Emirates drove oil prices higher, reinforcing demand for safe-haven assets.
The Bloomberg Dollar Spot Index rose on the back of this risk-off sentiment, although gains were initially tempered earlier in the session following remarks by US President Donald Trump, who hinted at “very positive” diplomatic engagements with Iran.
In a market commentary, Access Bank Group noted that: “currency movements were largely dictated by evolving geopolitical risks and volatility in energy markets.”
“Overall, currency markets were driven by shifting risk sentiment tied to energy market disruption and fluctuating expectations around the prospects for de-escalation versus further conflict,” the bank said.
The interplay between global uncertainty and domestic demand dynamics is expected to remain a key driver of the kwacha in the short term, with investors closely monitoring developments in the Middle East and their impact on oil prices and global capital flows.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments