Lusaka - Zambia's kwacha hit a two-month high on Friday as a rebound in copper prices and a pledge by President Edgar Lungu to cut spending and support the struggling mining sector soothed investors' concerns.
By 07h50 GMT the kwacha had gained 6.62 percent to 10.17 per dollar, its firmest level since September 23.
On Thursday Lungu backtracked from an earlier warning that the state would nationalise mines, pledging government's support to private companies, while also announcing a raft of spending cuts in a bid to reduce a wide budget deficit.
“It is very encouraging to see that type of commitment from the president,” Africa strategist at Barclays Bank Ridle Markus said from Johannesburg.
Demand for the local currency also increased as mining houses looked to offload dollars.
“Momentum remains skewed towards kwacha appreciation. We could see the unit trade under 9.9 today,” the Zambian unit of South Africa's First National Bank (FNB) said in a note.
“We have seen an increase in dollar flows on the market over the last few days. We expect more of these flows today and will most likely see mines come into the market in a bid to sell at the higher levels,” analysts at FNB said.
The kwacha has fallen more than 40 percent against the dollar in 2015 as waning demand for commodities from top-consumer China put the skids on foreign exchange revenues of Africa's second biggest copper producer.
REUTERS