Zambia Election Euphoria fuels Kwacha’s World-Beating Streak
Zambia’s kwacha extended its gains versus the dollar, making it the world’s best-performing currency since Hakainde Hichilema was announced the winner of the Aug. 12 presidential vote.
The kwacha has appreciated by 7.8% this week to 17.92 per dollar, the best performance out of more than 140 currencies tracked by Bloomberg globally and on track for the strongest close since May 2020. The southern African nation’s $1 billion Eurobonds due 2024 advanced for a fourth straight day to the highest level in more than two years.
The Zambian currency’s rally wiped out the past year’s losses as both offshore and onshore investors sold dollars into the market, and some importers held off buying them in anticipation of further kwacha strength, according to a note from First National Bank Zambia, a unit of Johannesburg-based FirstRand Bank Ltd.
“There is obvious hope amongst investors that there will a swift change in economic policy with the new administration in charge,” said David Willacy, a foreign-exchange trader at StoneX Group Inc. in London. “In such a small foreign-exchange market, an influx of dollars from reinvigorated offshore investors goes a long way in a short time, particularly when dollar buyers such as importers remove themselves from the market.”
Investors are betting Hichilema, who will be sworn in on Aug. 24, will be able to secure an International Monetary Fund economic program and associated $1.3 billion loan by the end of April. They’re also hoping he’ll revive the economy in Africa’s second-biggest copper producing nation, which has been wrecked by years of overspending that led to the government defaulting on its external debt since November.
