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Treasury bill expected to support Kwacha

THE Kwacha is this week expected to be weighed down by negative copper price outlook, but may receive support from the upcoming mid-month treasury bill in the short-term, Zanaco has observed.
In its daily treasury newsletter, the bank says on Friday, the local currency was anticipated to oscillate within a K11.10 and K11.25 range from Thursday’s trading session, which witnessed the local unit weaken against the United States (US) dollar as jitters over weak copper and oil prices continue to hit the market.
But analysts say the continued upward trend in the local money market rate (treasury bills) and the anticipated auction is expected to strengthen the Kwacha.
“We still expect the Kwacha to weaken next week (this week), weighed down by concern on copper price outlook but could receive support from rising  treasury bill yields in the short-term,” the statement reads.
On Thursday, Zanaco says continued importer demand denominated the day which witnessed the Kwacha touch a low of K11.09 and K11.11 where it closed on the bid and offer, respectively.
Cavmont Bank in its market report says despite the strengthening of the dollar against major currencies and low copper prices, the local unit has remained stable with minimal movements towards the downside.
On the regional front, trading between the greenback against selected currencies showed depreciation in the Botswana pula to 11.6945 on Friday from 11.6355 on Thursday, South African rand to 16.522 from 16.444 and Ugandan shilling to 3485 from 3483. However, the Nigerian naira remained unchanged at 199.22.
Meanwhile, copper price on the London Metal Exchange (LME) fell to its lowest since May 2009 on Thursday on widening concerns that a slide in oil prices could derail a global economic recovery, compounding worries about China’s waning growth in demand for commodities.
Three-month copper on the LME fell 0.8 percentage point to US$4,355 a tonne.
Prices earlier sank to US$4,330, having already shed over seven percent this year.