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The Zambian Kwacha weakened slightly against the United States dollar on Wednesday as demand for hard currency outpaced available supply, while signs of easing physical tightness weighed on the copper market.
According to Bloomberg data, the Kwacha fell by about 0.25 percent to close above K18.85 per dollar.
The ZAR/ZMW exchange rate also rose by more than one percent to close above 1.1700, with much of the movement attributed to a stronger South African rand.
Read more: Kwacha extends losses, ranks worst-performing African currency in July
The rand benefited from broad weakness in the US dollar following the United States Treasury’s decision to expand its purchases of longer-dated government bonds.
Meanwhile, copper’s recent supply squeeze showed signs of easing after more than 35,000 tonnes of the metal entered London Metal Exchange (LME) warehouses, marking the largest single-day increase since 2024.
The latest inflow, as reported by the Access bank group market commentary, followed a further 20,000-tonne increase in the previous session, helping to reduce pressure in the nearby copper market.
The three-month backwardation narrowed to about US$315 per tonne from as much as US$545 earlier in the week, indicating some easing of the extreme supply tightness.
However, immediate availability of copper remains constrained, with very tight Tom/next spreads suggesting that the underlying squeeze has not been fully resolved.
Copper prices also received support from the weaker US dollar, while China’s refined copper production fell by 3.7 percent month-on-month in July.
The decline in Chinese output was attributed to smelter maintenance and shortages of raw materials.
Despite the recent increase in LME inventories, the physical copper market remains tight.
However, improving warehouse availability and a more favourable import arbitrage into China are expected to gradually reduce some of the extreme supply pressure.
For Zambia, the developments remain significant given copper’s importance to export earnings, foreign exchange supply and mining investment.
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