Zambia’s Kwacha weakens most in world after Ukraine’s currency

Zambia’s kwacha fell a fourth day, the world’s worst performer after Ukraine’s hryvnia, as a dollar shortage in Africa’s second-biggest copper producer persisted.

“Local demand for the dollar, net dollar outflows from emerging markets and negative fundamentals, such as weakening copper prices continue to weigh heavily on the Zambian currency,” Zambia National Commercial Bank Plc analysts, including Virginia Mwalilino, wrote in an e-mailed note today. “The local currency is expected to remain on the back-foot.”

According to the Bloomberg the kwacha retreated 1.1 percent to trade at a record low 6.21 per dollar yesterday in Lusaka.

It reported that the kwacha dropped almost 11 percent this year, the fourth-worst performer of all currencies tracked by Bloomberg and the biggest decline in Africa.

The Bloomberg warned that a weaker kwacha poses risks to inflation in a country that imports items from oil to clothing, while also pushing up external debt repayment costs.

The Bank of Zambia has used $178 million of its foreign reserves and raised its benchmark lending rate to a record in a bid to support the local currency.

Zambia depends on copper for about 70 percent of its export earnings.

However, efforts by the Daily Nation  to  get comment from bot Finance Ministry officials and the BoZ governor failed as their phones went unanswered.