Zambia’s kwacha has hit a series of record lows since the start of the year as a severe drought keeps the pressure firmly on the copper-producing Southern African country’s economy.
Analysts had hoped Zambia’s emergence from default early last year would have helped sentiment, but the currency is now roughly 3% below where it was before its debt restructuring deal and has fallen nearly 15% over the last six months.
At the close of Wednesday’s trading session, the kwacha stood at a new record low of 28.13 per dollar, according to LSEG.
“In a local market like this one, some big payments for imported electricity, or similar, could easily drive the ZMW,” said Charlie Robertson, head of macro strategy at FIM Partners.
The strained electricity supply was forcing mining companies to cut production of copper, which is a key hard currency earner, Access Bank Zambia said in a research note.
The severe effects of El Niño caused the worst dry spell in southern Africa in a century last year, devastating crop production and forcing Zambia’s authorities to cut electricity generation on the Kariba dam, the biggest source of electricity.
“The amount of water available for hydropower generation remains insufficient for sustainable operations, especially given the unpredictable nature of regional rainfall patterns,” state power firm Zesco said on Tuesday.
The kwacha plunged when Zambia defaulted on $11 billion worth of external debt in November 2020, but saw a brief 20% jump last February when it became clear its restructuring efforts were going to be successful.
One financial analyst in Lusaka said some companies had sold dollars during Wednesday’s session in preparation for local tax payments next week, offering some support to the kwacha.
Reuters
I can bet against the Kwacha. K50 by the time the self praise Mudala leaves office. No wonder I keep my savings in Dollars & immediately convert all my salary to Dollars.
Once a currency loses trust from the people it’s users it becomes worthless like Zim Dollar. At this rate soon Zambia will Dollarize “sad” whether Govt issues SIs to stop it or not. I for one yave already Dollarized f.
Surely by now you’ve realised and been convinced its evil El Nino and the drought ??
This GRZ takes no responsibilty for the ills befalling us not even the zesco debacle
all they encourage us to do is Pray ???
With all the investments coming into the Country the dollar rate keeps falling?Does it mean all Forex
Is wiped by investors?
PLEDGES PLEDGES
Read the small print
Strategic planning and emergency measures (which are presently in short supply) are the panacea. Calamities will always be there…
The only calamity is a gullable population
Gold watches, smart suits, cowboy hats, big SUV and of course a big BINO,
are the only requiement needed to get you elected
Even when then the clock struck 14 hours the Kwacha failed to appreciate. Honestly, the most times the Zambian currency performs better in value is when the USD depreciates. It never takes orders from Hakainde or the drought. Hence, having less rain is a scapegoat.
Don’t use drought as an excuse. In Dubai it doesn’t rain but their economy keeps on booming. The secret lies in the fact that mines are sending our minerals (mainly in concentrate form) outside the country without meaningful returns for us. Previously the forex realized from copper/cobalt sales was kept by the bank of Zambia. But today no forex is coming back into the country. You export power to get dollars but you use the same dollars to import power. WHYME
How does drsight contribute to copper mining issues? The only president who managed the exchange rates was RB and MMD. Very intelligent team. We removed them and we brought in Sata. He mismanaged the economy by his euro bonds. Then clueless upnd came with text books and understanding little. We are on try and earlier now. Vendetta even tricked them