Kwacha signals recovery as copper price slumps


THE Kwacha is this week expected to be stable against the United States (US) dollar as corporates convert to meet mid-month tax obligations after the local unit depreciated by 2.4 percent last week, financial market players note.

But the price of copper yesterday struck its lowest in almost a month after the dollar withstood a weaker US jobs report that largely kept rate hike expectations intact.
Cavmont Bank says, “… [This week], however, we expect a correction in the performance of the Kwacha as corporates convert to meet mid-month statutory obligations.”
In its market report issued yesterday, the bank says with little or no change in the supply of the greenback, Friday’s trading session saw the Kwacha, which closed trading last week at K9.82 and K9.84, dip further against the greenback.

However, Zanaco in its daily treasury newsletter says the Kwacha is expected to remain under pressure from sustained in importer demand and is anticipated to trade in the range of K9.80 and K9.90 in the short-term.

The local unit extended its losses on Friday pushed by a surge in appetite for the dollar from commercial banks and corporates.
On copper, Reuters reports that three-month copper on the London Metal Exchange (LME) traded down 1.6 percent at US$4,732.50 a tonne, having struck its lowest since April 12 at US$4,720 a tonne.

Zambia Daily Mail