By Zambian Business Times
Kwacha projected to gain and settle around K15 per dollar
The gains that the Zambian Kwacha has posted in the last two days is in response to positive sentiment of the expected closure of the much anticipated debt restructure deal based on the International Monetary Fund – IMF backed debt sustainability analysis.
The Kwacha has posted gains from trading around K20 per dollar in the last three working days to close the day (Tuesday 20 June 2023) at about K16 per dollar, a massive gain of about 20% within a space of three working days.
Zambia’s renowned economist and researcher based in Nairobi – Kenya Dr. Patrick Chileshe has told the Zambian Business Times – ZBT in an exclusive interview that the Kwacha is responding to positive news from Zambia’s official creditors who on Monday were reported to have made serious progress in restructuring the debt and that the final announcement of deal closure was imminent in the next few days.
Dr. Chileshe whose work in Kenya currently includes sovereign risk assessment which includes Zambia’s economic performance at regional level stated that this news (eminent conclusion of debt restructuring for Zambia) has created positive sentiment which has forced net dollar holders to offload on the market which has significantly pushed up dollar supply.
He stated that this trend [of the Kwacha gaining] is expected to continue and that it would only be reversed if the definitive agreement is adverse. Dr. Chileshe further told ZBT that if this trend and the final announcement is made as expected, the Kwacha is expected to settle around the K15 per dollar.
President Hakainde Hichilema has announced a snap trip to France and is starting with a state visit to Rwanda, but it has been projected by pundits that his trip to France may be made to coincide and in anticipation of the debt restructure announcement.
If the debt restructuring deal is closed as per reports with a 30% to 50% debt forgiveness or haircut, HH would have scored a big win for Zambia. It is expected that once this debt restructure is closed, more foreign investors will be more optimistic and willing to invest in Zambia, which would then mean more forex supply and medium to long term stability of the local unit.- Zambian Business Times