Zambia’s kwacha slid the most this year amid speculation that foreign investment was withdrawn from the country, making the currency the world’s worst performer.
The kwacha retreated 1.6 percent to 5.375 a dollar as of 4:01 p.m. in Lusaka, the biggest decline since Dec. 27 on a closing basis and the weakest level since May 2009.
The depreciation was probably the result of a “big offshore player” exiting a position in government securities, Mwewa Kyamulanda, a Lusaka-based currency trader with Investrust Bank Plc (INVESTRU), said by mobile phone. The kwacha will probably strengthen if the central bank of Africa’s biggest copper producer intervenes in the market, as it did yesterday, he said.
“The Bank of Zambia don’t seem to like these levels,” Kyamulanda said.
Kanguya Mayondi, a spokesman for the central bank, wasn’t reachable on his mobile phone and didn’t immediately respond to an e-mail seeking comment.
The kwacha will probably strengthen to around 5.30 following an intervention, according to Kyamulanda. If the central bank doesn’t sell some of the $2.5 billion in foreign reserves it has access to, the local currency could retreat to 5.40, he said.
Zambia rebased its currency on Jan. 1, removing three zeros.
To contact the reporter on this story: Matthew Hill in Lusaka at [email protected]