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The Zambian Kwacha has rebounded in recent days and is now up by 0.30 percent year to date to rank among Africa’s best-performing currencies tracked by Bloomberg.
This came after the local currency had been a volatile start to the year for the Zambian Kwacha, plunging to a record low of K28.1752 per dollar last Wednesday.
However, the rebound was likely due to central bank intervention, and the broader bias remains bearish as severe drought increases power prices and risks hurting the economy.
This is contained in the daily market update released by Access Bank.
Last year, the kwacha lost more than 8.0 percent and was ranked the sixth worst-performing African currency against the United States dollar out of a basket of 23 currencies.
Moreover, the currency had lost almost 7.0 percent over the past six months.
Zambia’s worst drought in over a century is driving the currency’s decline by increasing the country’s dependence on costly food and power imports, depleting foreign reserves, and reducing export revenues from agriculture and copper.
Meanwhile, Absa bank indicated that on Wednesday, the Zambian kwacha traded on the backfoot against the US dollar attributed to sustained demand for greenback amid low supply being a major factor for the movement.
“The USD/ZMW interbank opened market at K27.700/27.750 on the bid-offer before losing 5 ngwee in the later period to quote K27.750/27.800 where it closed market.
“The near term is likely to have the ZMW trade under pressure as demand steadily mounts against insufficient supply,” it stated.
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