The Zambian kwacha, one of the strongest performing currencies in 2022, is on track for its first quarterly decline in nearly two years. Zambian leader Hakainde Hichilema claimed that stalled debt restructuring negotiations were adding to pressure on the local currency.
Zambia’s debt default
The Zambian kwacha, which ended 2022 as one of Africa’s best-performing currencies, has fallen from 18 units to the dollar on January 1 to just over 21 units to the dollar on March 31. Anotherreportby Bloomberg
stated that the kwacha would realize its first decline since the first quarter of 2020.
At the time, the kwacha’s decline against major currencies was reportedly due to fears that Zambia would become the first country on the African continent to default on its sovereign debt. A few months later, Zambia, led by Edgar Lungu, became the first country on the African continentto default on its debt. However, when Lungu stepped down in August 2021, the value of the Zambian kwacha soared from about 19.34 units per dollar (ZMW 19.34:US1) to 15.3:1 on September 2, 2022.
As Bitcoin.com News previously reported, the currency’s rebound was spurred by reports that the International Monetary Fund (IMF) had approved a bailout package for Zambia. Since the beginning of the year, however, the kwacha has stalled against the U.S. dollar and other major currencies.
President Hakainde Hichilema, in aop-edpublished in the Washington Post, apparently blamed the “cumbersome and bureaucratic” debt restructuring process for delaying finalizing his country’s planned reforms. According to the Zambian leader, such delays “put pressure on the country’s currency.”
Meanwhile, a Bloomberg report noted that a weakening Kwacha and a resurgence in inflation would likely lead to another rate hike by the Central Bank of Zambia.
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