Kwacha depreciates by 1.4% - experts

THE kwacha has depreciated by almost 1.4 per cent this year, market experts have revealed.

The local currency on Friday was buying at K5,191 and selling at K5,211 per US dollar.

It has seen little movement in the aftermath of the last September polls, sinking to K5,300 level on Wednesday, the lowest seen this month.

According to Barclays Bank, although the kwacha rebounded against the greenback in Thursday's trading, helped by improved dollar supply flows, it failed to sustain the appreciation.

The local currency, in early morning trading on Thursday, stood stagnant around K5170-K5190 per dollar as traders stayed on the fence, choosing to cautiously watch the market.

The local currency however could not sustain below the K5,200 per dollar resistance level, and posted a modest loss to an intra-day low of K5,200/K5,220 per dollar by mid-morning on speculation of dollar buying by corporates.

The kwacha, however self-corrected just before close of business to end at K5180/5200 per dollar, a level which was somewhat maintained on Friday, the bank explained in its daily market update adding that:

"The local currency has on a year-to- date depreciated by about 1.4 per cent from last year's closing levels of around K5,110/K5,130 per dollar."

It explained that the kwacha's weakness has partly been on the back of offshore dollar buying as investors have perceived dollar assets as a safer haven.

Meanwhile, copper prices rose on Friday on optimism that debt-laden Greece would secure a second bailout this week to avert a default.

Three-month copper on the London Metal Exchange climbed 1.3 per cent to U$ 8,406.25 a tonne after touching a three-week trough on Thursday.

Optimism has been growing that Greece has finally done enough to secure a second bailout after it set out extra budget savings, boosting commodities and equities.

More evidence of a sustained recovery momentum in the US economy is also lending support. US data released last week showed jobless claims falling to a near four-year low, solid growth in factory activity in the Mid-Atlantic area and a faster-than-expected rise in housing starts.

This has also helped push copper prices up.