Copper prices edged higher on international markets as investors responded to improving geopolitical sentiment following renewed peace talks between the United States and Iran, while Zambia’s kwacha maintained its recent strength against the U.S. dollar.
The rise in copper prices comes as investors balance optimism over reduced geopolitical risks with concerns that tighter monetary policy in the United States could limit further gains in commodities.
According to Access Bank’s latest market commentary, copper prices increased by 0.7 percent as hopes for progress in U.S.-Iran negotiations improved appetite for riskier assets and supported industrial metals.
Copper is a key export commodity for Zambia, Africa’s second-largest copper producer, making global price movements particularly important for the country’s foreign exchange earnings, government revenues and broader economic outlook.
However, the gains in copper were moderated by expectations that the U.S. Federal Reserve could keep interest rates elevated for longer. Strong U.S. economic data has strengthened expectations that the central bank may maintain a restrictive monetary policy stance, with markets increasingly pricing in the possibility of another rate increase in September.
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A stronger U.S. dollar often puts pressure on dollar-priced commodities because it makes metals such as copper more expensive for buyers using other currencies. The relationship between the dollar and commodity prices remains a major factor influencing investor decisions in global markets.
“Resilient US economic data has reinforced expectations that the Federal Reserve may keep interest rates higher for longer, with markets increasingly pricing in the possibility of a rate hike in September,” Access Bank said in its market assessment.
While copper gained, aluminium remained under pressure after recording its sharpest monthly decline since 2008. The weakness in aluminium prices was linked to improving supply conditions and reduced concerns over disruptions in global markets.
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Access Bank attributed the aluminium decline to easing fears of supply disruptions in the Middle East, record export levels from China and improved alumina shipments, which have contributed to a surplus in the market.
On the domestic currency front, Zambia’s kwacha remained relatively stable against the U.S. dollar, trading within a narrow range as it continued to benefit from improved market confidence.
Bloomberg data showed the kwacha closed largely unchanged, holding just below the 18.15 kwacha per dollar level.
The currency’s stability follows a strong performance in June, when the kwacha appreciated by 1.14 percent against the dollar. The gains marked the third consecutive month of positive performance for Zambia’s currency.
According to Bloomberg rankings cited by Access Bank, the kwacha was the fourth-best performing African currency against the U.S. dollar in June, reflecting improved conditions in the domestic foreign exchange market.
The recent performance of the kwacha has been supported by relatively stable foreign exchange conditions, stronger investor sentiment and improving confidence in Zambia’s economic outlook.
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The currency’s resilience is particularly significant for Zambia because exchange rate movements directly affect the cost of imported goods, fuel and other essential commodities. A stronger kwacha can help reduce import costs and ease inflationary pressures.
Market participants are expected to continue monitoring global developments, including U.S. monetary policy decisions, geopolitical developments and commodity market trends, all of which could influence copper prices and currency movements in the coming weeks.
For Zambia, maintaining stability in the kwacha while benefiting from stronger copper prices could provide additional support for economic recovery efforts and strengthen external financial conditions.
