Maravi

Rise in copper prices hasn’t positively influenced kwacha - market experts

Rise in copper prices hasn’t positively influenced kwacha - market experts
By Chiwoyu Sinyangwe
Wed 25 Nov. 2009, 04:00 CAT

THE latest rise in copper prices which last week traded just under the psychological mark of US $7,000 per tonne, a 14 month high, has not positively influenced the kwacha which is directionless, hovering around K4, 650 against the US dollar, according to market experts.

The price of copper which accounts for the bulk of the country's total foreign exchange earnings at about 63 per cent, has continued to record steady rise on the international market, rising by 4.8 per cent on London Metal Exchange (LME) last week.

Most analysts contend that although fundamentals in the case of copper remained strong, the major rise in prices in the last few months had been backed by a weaker dollar while the US is expected to keep interest rates low for an extended period and that indicated that the recovery could be slow.

But according to this week's treasury market data from Finance Bank, the recent rise in copper prices had not positively influenced the performance of the kwacha which continues to trade weakly against major convertible currencies.

According to the Finance Bank Treasury Market weekly treasury update, the kwacha was trapped in a range last week in mild trading opening the week trading at a buy rate of K4, 630 and a sell rate of K4, 650 on the inter-bank market.

It stated that the kwacha remained largely unchanged at these levels until Wednesday when it firmed to K4,615 and K4,635 levels on improved US dollar supply on the local market.

The local currency could not however hold on to these levels as demand for the greenback picked up forcing it to retreat to K4, 625 and K4, 645 levels by close of business on Thursday.

The kwacha went on to close the week at these levels thereby recording a negligible appreciation of 0.1 per cent during the week.

And Finance Bank stated that the kwacha was expected to continue trading weakly despite the recent leap in copper prices on the international market.

“Copper prices have rallied in recent weeks and had traded just under US $7,000.00 per tonne earlier last week touching a 14 month high, benefiting from strong global equities and US dollar weakness,” stated Finance Bank in its treasury market update. “This, however, has had little or no impact at all on the kwacha's performance. This week, we expect the kwacha to continue trading in a K4,600 range.”

Labels: COPPER, KWACHA

posted by MrK @ 11:15 AM