Kwacha tumbles against US dollar

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The rebased kwacha is in the short term expected to trade within the range of KR5.36 (K5,360) and KR5.44 (K5,440) against the US dollar as demand for the greenback remains strong.


Meanwhile, the local currency was flat against the US dollar on Tuesday with the local market witnessing little activity on the day.


According to the ZANACO treasury Newsletter for 10th April, 2013, trading on the interbank market was relatively quiet on the day whilst corporate activity was insufficient to move the market significantly.


“From an open of KR5.38 (K5,380) and KR5.40 (K5,400) on bid and offer respectively the local unit appreciated by only 0.5 Ngwee to close at KR5.37 (K5,375) and KR5.39 (K5,395)” ZANACO said.


The Bank says the rebased kwacha continued to benefit from a build-up of dollar selling that has improved supply and enabled to break through the KR5.40 psychological barrier.


In international news, Three-month copper on the London Metal Exchange drifted lower and slipped off 0.37 per-cent to $7,597 a tonne by 07:01 hours GMT today (Wednesday), after rising 2.4 per cent in the previous session.


Reuters reports that this was necessitated by traders taking profits on short-covering gains and improvements in trade data from China underpinning expectations of the metal’s demand


“Brent crude futures rose above $105 per barrel on Tuesday after data showed China’s inflation in March was slower than expected, giving its central bank room to keep monetary policy easy and support oil demand in the world’s second-biggest consumer. And front-month Brent futures rose 47 cents to $105.13 per barrel by 0315 GMT, after moving in a $2-range in a choppy session on Monday ” Reuters said


And Gold edged up on Wednesday as Japan’s aggressive monetary easing policy boosted bullion’s appeal as a hedge against inflation.


Reuters however reports that gains may be capped as stronger equities lure buyers seeking better returns.


Gold had gained $2.14 an ounce to $1,586.84 by 0610 GMT, after hitting $1,590 on Tuesday, its highest since April 2.