Copper gains on easing geopolitical tensions as Kwacha holds firm

Copper prices edged higher on the international market as investors weighed improving geopolitical sentiment following renewed peace talks between the United States and Iran, while Zambia’s kwacha remained largely stable after recording a third consecutive month of gains against the US dollar.

According to Access Bank’s latest market commentary, copper prices rose by 0.7 percent as optimism over the resumption of US-Iran negotiations boosted investor appetite for risk assets.

The gains, however, were tempered by expectations that the US Federal Reserve could maintain a tighter monetary policy, which continued to strengthen the US dollar and limit advances in dollar-priced commodities.

“Resilient US economic data has reinforced expectations that the Federal Reserve may keep interest rates higher for longer, with markets increasingly pricing in the possibility of a rate hike in September,” the bank noted.

A stronger dollar typically weighs on commodity prices by making metals such as copper more expensive for buyers using other currencies.

Meanwhile, aluminium remained under pressure after posting its sharpest monthly decline since 2008.

Access Bank attributed the weakness to easing concerns over supply disruptions in the Middle East, record aluminium exports from China and improved alumina shipments, developments that have pushed the market into oversupply.

On the domestic front, the Zambian kwacha traded in a narrow range, closing largely unchanged against the US dollar.

Bloomberg data showed the local currency remained anchored just below the K18.15 per US dollar level.
The relative stability follows a strong performance in June, when the kwacha appreciated by 1.14 percent against the greenback, marking its third consecutive month of gains.

According to Bloomberg rankings cited by Access Bank, the kwacha was the fourth-best performing African currency against the US dollar during the month.

The currency’s resilience comes despite continued uncertainty in global financial markets, supported by improving investor confidence and relatively stable conditions in the domestic foreign exchange market.

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