4 February 2013

Zambia: Kwacha Struggles As Copper Prices Nose-Dive

THE Kwacha is struggling to regain strength after hitting an all time low against the United States (US) dollar, as it continues to be under pressure on the back of robust demand from market players.

The local unit opened interbank trading on an intraday day high of between KR5.370 and KR5.390 on the bid and offer respectively.

The Zanaco money market analysts however noted that, the Kwacha could neither hold on to or build on its overnight gains against the greenback and was pegged back to end trading at between KR5.410 and KR5.430 at the time of the close of the money market trading last week.

They said the dollar demand has been the major driver of the Kwacha's depreciation and a similar trend was expected during last week's money market trading session in which the Kwacha was expected to touch the KR5.450 mark on the interbank trading.

And Copper prices on the London Metal Exchange (LME), have gone down.

Copper prices dipped towards the end of last week, re-treating from a three to a half month peak as investors grew wary about the lack of underlying metals demand amid economic recovery in top metals consumer China and in the United States.

According to Reuters, the three-month copper on the LME closed 0.7 per cent weaker at US$8,165 a tonne after three days of gains and after touching an intra day peak of $8,291.25, its highest since early October.

Meanwhile, Brent crude oil prices on the world market rose to a three-month high at the close of business last week , widening its premium over US crude, concerns about rising crude stockpiles in the US Midwest, prompting heavy trading based on the spread between the two benchmarks.

Brent crude rose 65 cents to settle at $115.55 a barrel, the highest settlement since mid-October, reaching a session peak of $115.76.

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