21 January 2013

Zambia: Kwacha Makes Slight Gain

THE Kwacha opened trading at KR5.270/5.290 on the bid and offer, respectively, and traded flat around this level for much of the trading session.

At the time of the close of trading on Friday, the Kwacha appreciated by 10 Ngwee to touch a day's peak of KR5.260/5.280 where it eventually closed trading.

According to the Zanaco Treasury Newletter, the local unit's appreciation on the day was on the back of offshore selling that provided a cushion against persistent dollar demand.

Money market analysts said the near term should see the Kwacha hold steadily against the green-back around these levels with the possibility of a further mild appreciation.

They said the expected trading range for the local unit on the inter-bank market would be between KR5.200 and KR5.300.

There was no noted movement in money market liquidity at the time of close of business last week as the Banks Aggregate Current Account Balance remained unchanged at KR1, 438.8 million.

The weighted average overnight lending rate traded downwards, falling by 15 basis points to 7.35 per cent from 7.5 per cent recorded towards the end of last week.

The volume of inter-bank funds traded rose to KR256.50 million from end-of-week trading closing level of KR205.5 million.

In the near term, the inter-bank lending rate is expected to oscillate between 7.00 per cent and 7.50 per cent.

Meanwhile, copper and oil prices on the world market have risen by one per cent and 1.29 per cent, respectively.

Copper prices on the London Metal Exchange (LME) rose more than one per cent at the close of business on Friday.

According to Reuters, the increase in the price was as a result of encouraging housing and labour market data from the United States boosted optimism about the pace of recovery in the world's largest economy, and bolstered the outlook for metals demand.

The benchmark copper price on the LME rose to an intra-day high of US$8,065 a tonne. It ended at $8,054 a tonne, up 1.3 per cent from of $7,946 which was recorded towards the end of the week.

Brent crude futures for March delivery rose by $1.42, or 1.29 per cent, at the close of business last week, settling at $111.10 a barrel.

The front-month contract traded between $109.45 and $111.38 a barrel during the trading session.

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