The Zambian kwacha, one of the best performing currencies in 2022, is now expected to see its first quarterly decline in nearly two years. Zambia’s leader, Hakainde Hichilema, said stalled debt restructuring talks are increasing pressure against the local currency.
Zambia debt default
After ending 2022 as one of Africa’s best-performing currencies, the Zambian kwacha depreciated from 18 units of the local currency to the dollar on January 1 to just over 21 units to the dollar on March 31. report by Bloomberg has said that the kwacha is set to make its first quarterly decline since the first quarter of 2020.
At the time, the kwacha’s slide against major currencies was blamed on fears that Zambia would become the first defaulting sovereign on the African continent. A few months later, Zambia, then led by Edgar Lungu, would become the first country on the continent to default. However, following Lungu’s departure in August 2021, the value of the Zambian kwacha increased from around 19.34 units per dollar (ZMW19.34:$US1) to 15.3:1 on September 2, 2022.
As Bitcoin.com News previously reported, the currency’s rally was fueled by reports that the International Monetary Fund (IMF) had approved a bailout package for Zambia. However, since the beginning of the year, the kwacha has lost ground against the US dollar and other major currencies.
in a opinion piece published in the Washington Post, President Hakainde Hichilema apparently blamed the “cumbersome and bureaucratic” debt restructuring process for causing delays in the completion of his country’s planned reforms. According to the Zambian leader, such delays “are putting pressure on the local currency.”
Meanwhile, the Bloomberg report suggested that a weakening kwacha and a resurgent inflation rate are likely to trigger another rate hike from Zambia’s central bank.
Sign up your email here to receive a weekly update on African news in your inbox:
What are your thoughts on this story? Let us know what you think in the comments section below.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
