LUSAKA — The Kwacha weakened to 27.45 per US dollar in midday trading on Tuesday, its lowest level in six weeks, as copper prices on the London Metal Exchange dropped 2.3 percent overnight.
Bank of Zambia governor Denny Kalyalya said the central bank had sold $18 million to smooth excessive volatility but stressed that monetary policy remained focused on inflation targeting rather than defending a fixed exchange rate.
Mining accounts for more than 70 percent of Zambia’s export earnings, making the currency highly sensitive to commodity cycles. Economists at the Zambia Chamber of Commerce and Industry warned that importers of fuel, fertiliser and pharmaceuticals would pass higher costs to consumers.
On Cairo Road, bureau de change operators reported brisk demand for dollars from small businesses stocking imported goods ahead of the school term. Mutale Chisanga, a financial analyst, advised households with dollar liabilities to consider hedging instruments offered by commercial banks.
Finance Minister Situmbeko Musokotwane is scheduled to address Parliament on Thursday on fiscal measures to stabilise the macroeconomic environment, including progress on debt restructuring with official creditors.
