14 February 2013

Zambia: Kwacha Slips

THE money market's interbank trading on Tuesday saw the Kwacha slipping marginally against the United States (US) dollar on a fairly balanced trading arena.

According to the Zanaco Treasury Newsletter, the Kwacha opened trading at between KR5.30 and KR 5.32 but fell in early trading to an intraday low of between KR5.310 and KR5.330.

Zanaco's money market analysts, however, observed that the dip was shortlived as dollar supply pulled the Kwacha back to opening levels.

The local currency traded within a tight range as demand for the foreign currency was matched by healthy dollar inflows from corporate players.

The Kwacha ended the day slightly down at between KR5.305 and KR5.325, a 0.5 ngwee depreciation. In the near term the local currency is expected to be range- bound trading between KR5.280 and KR5.350.

According to analysts, the money markets are expected to continue experiencing fluctuations in the levels of liquidity.

The banks aggregate current account balance decreased to KR591.5 million from the previous day's KR635.9 million.

Demand for interbank funds dwindled and this saw the volume dropping to KR156.9 million from KR362.4 million whilst the weighted average overnight lending rate went up to 8.83 per cent from 8.6 per cent.

And trading on the London Metal Exchange (LME) on Tuesday show that prices of most metals rose, while the Brent crude futures also recorded a similar trend after commodities experienced a low after being affected by Asia's lunar festivity.

According to Reuter,s copper prices rose up supported by a softer dollar and with traders reluctant to take big positions because of a week-long holiday in top consumer China.

Benchmark three-month copper ended up at US$8,236 per tonne from a last bid of $8,199 on Monday. Turnover was extremely slim at under 7,000 lots.

Gold prices experienced a rebound from a six-week low to trade flat as the dollar fell.

By 19:30 GMT, gold's spot price hovered around $1,650, versus the late Monday afternoon level of $1,649.36.

Brent crude futures rose after OPEC in a monthly report raised the outlook for the amount of crude the group expects be able to produce in 2013 and keep supply and demand in balance.

Brent March crude rose by 53 cents, or 0.45 per cent, to settle at $118.66 a barrel, having traded from $117.81 to $118.90.

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