Pressure on Kwacha eases on release of Zambia’s Debt Position Stats by Finance Ministry

The Kwacha yesterday reversed some of its losses after the Ministry of Finance reported its current external and domestic debt position on its website. The Kwacha has been under pressure post August after it was announced that deliberations on the long awaited IMF bailout package meetings would only be convened in October at the annual World Bank/IMF meeting. This had the impact of triggering a sell off in Zambian assets held by offshore investors who have evidently grown weary of an IMF package wait. This saw the market experience a rise in dollar demand that saw the Kwacha shave off 5.81% in value post August, reversing close to half the gains year to date.

Kwacha intraday trajectory on 18 Aug.
Kwacha intraday trajectory on 18 Aug.

Zambias biggest hurdle with closing an IMF deal has been vagueness on external debt position. The IMF program wait has made investors who took positions on Zambia very weary that it seems like the deal just won’t come, IPEX Capital carried in a note to clients. However with the release of some data on the countries debt position, some of the sell off effects were cut which saw the Kwacha appreciate 0.52% to ZMW9.48/USD on 18 August from ZMW9.54/USD previous day. The Kwacha is also under pressure from a seeming rise in business pulse.

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