Market News
Zambia's kwacha hits record low against U.S. dollar - REUTERS
By Rachel Savage and Chris Mfula
JOHANNESBURG/LUSAKA, May 8 (Reuters) - Zambia's kwacha currency hit a record low against the U.S. dollar on Wednesday, touching 27.30 to the dollar amid hard currency shortages and a punishing drought that has led to power cuts in the southern African copper producer.
The kwacha has lost almost 5% of its value against the greenback this year and 17% in the last six months, according to LSEG data. Its previous low was 27.23 on February 6.
The U.S. dollar index , which tracks the greenback against a basket of currencies, has strengthened 4% to 105.58 this year. But the MSCI International Emerging Market Currency Index (.MIEM00000CUS), has weakened just 1%, showing the kwacha underperforming larger developing country currencies. One of the largest copper producers on the African continent, Zambia defaulted in 2020 during the COVID-19 pandemic.
Its debt restructuring efforts have been beset by delays, although they took a step forward in March when the government and a group of bondholders reached a deal-in-principle. Advertisement · Scroll to continue "There is too much demand for dollars, mainly to meet imports of petroleum products and we have very scanty supply. It appears we are heading towards 30 per dollar," a trader at commercial bank in Zambia said.
An International Monetary Fund (IMF) team is currently visiting Zambia, discussing a third payout from a $1.3 billion rescue loan programme approved in 2022.
