Bloomberg News

Zambia’s Kwacha to Rally on Copper Prices, Absa’s Keenan Says

May 22, 2012

Zambia’s kwacha will strengthen 1.7 percent to 5,100 per dollar by “mid-year” as the price of copper rises, according to Mike Keenan, currency strategist at Absa Bank Ltd., Barclays Plc’s African unit.

“We are optimistic about the kwacha,” Keenan said in an interview yesterday in Ebene, south of Port Louis, the Mauritian capital, at a conference organized by Barclays’ Mauritian unit.

The three-month delivery contract for copper climbed as much as 1.1 percent to $7,816 a metric ton on the London Metal Exchange today. The price is expected to reach $9,300 by the end of 2012, Keenan said.

“We are constructive about copper prices, which when combined with great foreign direct investment prospects into the country’s mining sector collectively implies an improved balance of payments situation,” he said.

Zambia’s central bank has left its benchmark interest rate unchanged at 9 percent, with inflation accelerating to 6.5 percent in April from 6.4 percent in March.

“Lower inflationary pressures and heightened central bank vigilance surrounding price stability are also conducive to a firmer kwacha environment,” Keenan said.

The strategist is bearish on Ghana’s cedi. “The county’s rampant demand for imported goods” has “created a strong demand for dollars”, he said. “Despite tighter monetary conditions, the cedi has remained on the back foot, which when combined with the country’s solid gross domestic product growth rates suggest that more rate hikes may be needed.”

To contact the reporter on this story: Kamlesh Bhuckory in Port Louis at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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