Economy / Zambia
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Copper Declines To Rein In Kwacha Gains
June 2008 | Currency ForecastSorry, you must be a subscriber to view this article in full. If you are a subscriber please login.
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We see scope for short-term depreciation in the kwacha towards ZMK3,500/US$, following a drop in copper's price from US$4.03/lb on April 17 to US$3.56/lb on June 5. Over the last 18 months, movements in the kwacha have lagged movements in copper's price, and the currency's 32.4% appreciation since it reached a one-year low of ZMK4,390/US$ on January 1 2007 has stalled over the last month, but with further scope for copper to fall, we could see kwacha's stall turn into a short-term fall. In such a scenario the currency has 18-month trendline support at ZMK3,600/US$ and five-year support at ZMK4,000/US$. Should copper prices strengthen, the currency faces seven-year trendline resistance at ZMK3,000/US.