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Copper mining in Zambia propels country’s currency

Copper mining in Zambia propels country’s currency

Zambia’s kwacha has recorded an increase since December 2019, gaining 5.1% against the dollar at 6.41 p.m. in Lusaka. It has advanced 13.6% this month, making it the world’s best performing currency in the period tracked by Bloomberg. This was attributed to increased copper production in the country.

Zambia produced 882,061 tonnes of copper in 2020, up 13.6% from 776,430 tonnes produced in 2019, a record Mines Minister Richard Musukwa named it a “historical high” for Africa’s second-largest copper producer.

Copper’s record prices have been more than enough to offset a 3.6% drop in the southern African nation’s production in the six months through June compared to the same period a year earlier. Copper climbed as much 3.2%, the most since May 27 .

Boost dollar supply

Zambia depends on copper for more than 70% of its foreign-exchange earnings, and sustained high prices of the commodity is helping boost dollar supply. Investors have also been lured by local currency bond yields of nearly 33%, with the expectation that the government will finalize a long-awaited deal with the International Monetary Fund after elections next month.

“We have seen now a number of offshore investors coming back into the market. They are “playing a very active role in supporting the inflow of foreign currency. The prospects for the mining sector look positive despite COVID-19, “said former Finance Minister Bwalya Ng’andu.

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