Rising copper prices propping kwacha - Citibank

Rising copper prices propping kwacha - Citibank
By Fridah Zinyama
Tue 23 Feb. 2010, 04:06 CAT

THE kwacha last week closed in the region K4,670 to K4,710 against the US dollar after opening within the same band.

The Citibank's treasury market update last week indicated that the market was rather inactive in trading from both the corporate and interbank side of things.

Fundamentals will however remain rather strong in the local economy, with much of the currency play likely to come in from news of the global economy as whole and related investor flows hitting the local market.

The bank observed that rising copper prices have continued to prop the kwacha, with modest strength possible on this score.

Meanwhile on the London Metal Exchange, copper fell 2 per cent on Friday, paring a rally in the previous session, under pressure from a firmer dollar and an increase in the US Federal Reserve discount rate.

The dollar leapt and the euro hit a nine-month low after the Federal Reserve said it was raising the interest rate it charges banks for emergency loans, signalling it was starting to normalise monetary policy.

The bank said copper, the red metal, which is used in power and construction, hit a three week high at $7,336.00 after strong regional manufacturing data in the United States pointed to brighter economic prospects.

Three-month copper on the London Metal Exchange was at $7,152.50 a tonne compared with Thursday's closing bid at $7,260 per tonne while aluminium was $31 lower at $2,083.