Zambia’s kwacha has continued to weaken, reaching a series of record lows since the beginning of the year. This decline is largely attributed to a severe drought impacting the country’s economy.
Despite emerging from debt default early last year, the kwacha has depreciated significantly, falling nearly 15% in the past six months and currently trading at around 27.95 per dollar.
The drought, exacerbated by the El Niño phenomenon, has severely impacted hydroelectric power generation, leading to reduced industrial output, particularly in the copper mining sector, a key foreign revenue earner for Zambia.
While Zambia’s successful debt restructuring efforts had initially boosted the kwacha, the ongoing drought has negated these positive effects.
The kwacha’s depreciation has been further influenced by local factors, such as companies selling dollars in anticipation of upcoming tax payments.
This news article highlights the significant impact of the drought on Zambia’s economy and the resulting depreciation of its currency.
