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The Zambian Kwacha extended gains against the U.S. dollar for a fourth consecutive session on Wednesday, supported by increased foreign currency supply ahead of month-end, Access Bank Group said.
The local currency appreciated 0.67% to close just below K19.5200 per dollar, according to Bloomberg data cited by the bank.
The Kwacha also strengthened against the South African rand, with the ZAR/ZMW cross falling by nearly 2% to just below 1.1950.
Access Bank attributed the move to a combination of kwacha strength and weakness in the rand against the dollar.
The continued appreciation of the Kwacha comes amid increased foreign currency supply typically associated with month-end transactions, providing support to the local currency in the foreign exchange market, the bank said.
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However, the broader international foreign exchange environment remained supportive of the dollar, underpinned by stronger U.S. economic data, rising Treasury yields and expectations of a more hawkish Federal Reserve.
The Bloomberg Dollar Spot Index was little changed after gaining 0.6% on Wednesday and reaching a near two-month high, Access Bank said.
The 10-year U.S. Treasury yield remained around 5.1% following its largest one-day increase in several months.
The September U.S. composite Purchasing Managers’ Index (PMI) reading of 58.4 also reinforced perceptions of resilience in the U.S. economy, the bank said.
Rising energy costs and persistent inflation were further contributing to expectations of tighter monetary policy from the Federal Reserve, Access Bank said.
“Stronger US growth and widening rate support continues to provide a favourable backdrop for the dollar,” the bank said.
However, it noted that the dollar was becoming increasingly sensitive to signs of stabilisation in energy prices or a moderation in expectations for further U.S. interest rate increases.
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