Kwacha poised to appreciate against dollar

Kwacha poised to appreciate against dollar
By Gift Chanda
Mon 06 Feb. 2012, 12:00 CAT

THE kwacha is poised to appreciate against the US dollar due to improved copper prices, according to analysts. And Copper prices jumped 3.2 per cent on Friday after a sharp improvement in the US job market and higher factory orders raised hopes for stronger demand.

The money market last remained quiet with very little flows on both the corporate and interbank desks, with the Kwacha closing Friday's trading session at K5,155 a dollar. The local currency traded in the range of K5,120 to K5,150 for most of the session on Thursday with lesser volatility compared to previous sessions on Wednesday.

"In the short term, the local unit is expected to trade range-bound with resistance and support levels at K5,050 and K5,250 respectively," Barclays bank stated in its market update.

"In the longer term, fundamentals from improved copper prices will lend support to the local unit."

Barclays Bank further anticipated that the market would find direction from volumes of dollar supply and demand.

And Copper rose to record height on Friday after data showed an improvement in US, Chinese and German manufacturing.

Benchmark copper on the London Metal Exchange closed at US $8,440 per cent against Thursday's close of US $8,320, having hit 4-month highs of $8,679.50.

Copper posted gains of 9.5 per cent in January.

The pace of growth in the US manufacturing sector rose in January to its highest level in seven months, although a measure of employment faded and private-sector employers added fewer jobs than expected, data showed on Wednesday.