ZMK: Strong Fundamentals Support Medium Term Gains

Having appeared to extend the broad appreciatory trend which played out in 2009 through January 2010, reaching a high of ZMK4,370/US$ on January 19, the Zambian kwacha has since weakened towards the ZMK4,600-4,700/US$ area. While the unit has broken through trendline support at ZMK4,600/US$, it has failed to dip below the ZMK4,750/US$ level which forms a support level going back to the third quarter of 2009. For the time being we expect the kwacha to continue trading sideways, similar to the pattern which emerged in the second half of 2009, while highlighting key support and resistance levels at ZMK4,750/US$ and ZMK4,400/US$ respectively, which if broken would signal a change in trend over the short term.

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