Kwacha Fall Continues As Zambia Seeks To Reorganize Debt

The kwacha has continued to depreciate this week, reaching K18 per dollar on Tuesday and declining to almost K19. It is the world’s worst performing currency this year.

The fall comes amid weak economic productivity and depleted foreign currency reserves. Reserves are at record lows and will cover less than two months of imports.

“USD/ZMW reached these historic new levels mainly in view of the absence of US dollar supplies on the local market, causing what seems to be panic buying of dollars,” First National Bank (FNB) Zambia stated earlier this week.

The recent currency depreciation has previously been blamed on the coronavirus outbreak, according to Vice President Inonge Wina. However, some have challenged government on the claim given that the kwacha was already depreciating before the virus spread.

This week’s losses comes as Zambia asked banks for proposals to reorganize $11.2 billion of foreign debt. The $3 billion worth of Eurobonds are trading at distressed levels.