Zambia’s kwacha hit its weakest point on record against the dollar on Tuesday, after falling copper prices tightened foreign exchange inflows into Africa’s second largest producer.
The kwacha eased to 6.48/6.50 per dollar, from a close of 6.40/6.44 on Monday.
“Dollar inflows from copper sales have been dwindling due to low prices and this has had a negative impact on the kwacha,” one commercial bank trader said.
Zambia in March lifted a ban on the use of dollars for domestic transactions as regulators sought to ease pressure on the sliding kwacha, but traders are concerned this policy may provide only temporary currency support.
“There is a perception that the recent lifting of foreign exchange restrictions to ease pressure on the kwacha may not be a permanent measure and this has affected the confidence levels,” the trader said.
FNB said in a daily market note on Tuesday the kwacha could depreciate further unless dollar inflows increased. (Reporting by Chris Mfula; Editing by Joe Brock)