Kwacha weakens as dollar demand rises, copper prices strengthen

The Kwacha came under pressure against the United States dollar during mid-week trading as strong demand for the greenback from importers and corporate buyers outweighed limited foreign currency supply.

According to the Zanaco Daily Treasury Newsletter, the local currency opened trading on Thursday at K18.1100/K18.1600 against the US dollar before weakening to an intraday low of K18.2500/K18.3000.

It later closed at K18.2000/K18.2500 on the bid and offer, respectively.

Zanaco attributed the depreciation to elevated demand for US dollars amid constrained market supply and expects the currency to trade within a narrow range in the short term, with movements largely determined by fluctuations in demand and supply.

Read more: Copper gains on easing geopolitical tensions as Kwacha holds firm

On the international commodities market, copper prices strengthened on July 15, supported by tightening supply conditions and improving global economic sentiment.

Copper futures rose by about 1.4 percent to around US$6.35 per pound as stronger investor appetite for industrial metals lifted prices.

Oil prices also extended gains for a fourth consecutive session after renewed United States strikes on Iranian military installations heightened fears of wider conflict in the Middle East and possible disruptions to oil supplies through the Strait of Hormuz.

Meanwhile, gold prices recovered from earlier losses after weaker-than-expected US producer price data for June eased some inflation concerns.

Spot gold traded at about US$4,057 per ounce, while US gold futures settled 0.4 percent lower at US$4,051.80 per ounce.

The developments suggest global commodity markets remain supported by supply concerns and geopolitical tensions, while the local foreign exchange market continues to face pressure from strong demand for US dollars.

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