Rédaction Africa Links 24 with Zimeye
Published on 2024-02-26 16:45:10
Zambia’s Kwacha has emerged as Africa’s best-performing currency against the United States dollar for the current year according to data from the London Stock Exchange Group (LSEG). The currency saw a significant surge of 13.8%, bringing it to 22.8 against the US dollar in 2024. This remarkable achievement can be attributed to the bold actions taken by the Bank of Zambia, the nation’s central bank, which implemented a tightening of monetary policy by raising commercial banks’ reserve ratios and adjusting interest rates upward.
These measures were strategically deployed to counteract a decline in the Kwacha that was contributing to an increase in inflation. Danny Greef, Co-Head of Africa at research firm ETM Analytics, commented on the Kwacha’s stellar performance, noting that the sustainability of its strengthening depends on the nation’s ability to attract more foreign investment.
One of the challenges facing Zambia is the prolonged debt restructuring, which has been ongoing for four years and is seen as a significant impediment to foreign investment and a weakening force on the Kwacha. Additionally, despite governmental efforts to stimulate the sector, copper production—the primary foreign exchange earner for Zambia—has experienced a decline.
During a recent public forum, Bank of Zambia governor Denny Kalyalya addressed these challenges by explaining that the measures taken by the central bank are intended to curb excessive demand while anticipating supply mainly from the mining sector. Despite a marginal weakening of the Kwacha last week, dropping from 22.5 to $1, it still maintained its resilience with a strength exceeding 20% compared to the record low of 27.23 recorded on February 6.
Looking ahead, analysts emphasize the importance of addressing the hindrances to foreign investment and diversifying the economy to reduce reliance on copper production. The sustainability of the Kwacha’s performance will largely depend on the government’s ability to attract more foreign investors and implement policies that promote economic growth and stability.
In conclusion, Zambia’s Kwacha has emerged as Africa’s top-performing currency against the US dollar, showcasing resilience and strength in the face of challenges. The nation’s central bank and government are taking proactive measures to address economic issues and attract foreign investment, setting the stage for continued growth and stability in the future.
Read the original article on The Zimbabwe Eye
