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The Zambian Kwacha strengthened against the United States dollar on Friday, supported by improved foreign currency inflows, although the local currency could face renewed pressure this week as election-related uncertainty weighs on market sentiment.
According to Bloomberg data cited by Access Bank Group, the Kwacha gained more than one percent on Friday to close below the K19 per dollar mark.
The gains helped the currency remain broadly unchanged over the course of the week.
Read more: Kwacha slips as markets await month-end forex support
However, Access Bank expects the Kwacha to come under some pressure ahead of Thursday’s election as businesses and investors adopt a more cautious approach to the market.
The bank said the currency’s performance would also be influenced by developments in global financial markets, particularly the strength of the US dollar.
Meanwhile, copper prices have climbed above US$14,000 per tonne on the London Metal Exchange (LME), supported by tightening global supplies and stronger demand from the United States and China.
“LME copper inventories had fallen by more than 40 percent since May, while the widening price gap between nearby and three-month contracts indicated increasing scarcity in the near term, Access Bank said.
For Zambia, sustained higher copper prices could provide support to export earnings and foreign currency inflows, potentially helping the kwacha if mining receipts increase.
However, Access Bank warned that elevated copper prices could eventually weaken Chinese demand and limit further gains in the metal.
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