Kwacha: Falling Star?

December 2005 | Currency Forecast

Notwithstanding strong fundamentals and largely upbeat sentiment, after gaining almost 37% in just two months, the Zambian kwacha is losing momentum, and we do not see much potential for further appreciation, short-term. Continued strong copper inflows and ongoing investor confidence should keep the unit firm, with key long-term support levels at ZMK3,950.00/US$ and ZMK4,600.00/US$, but the rally appears to be over for now. Aside from the technical reasons, the rising opposition to currency strength from the exporter community may put pressure on the central bank to intervene. That said, a break of resistance at ZMK3,000.00/US$ would set up medium-term gains

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