Kwacha: Further To Fall?

June 2006 | Currency Forecast

The kwacha appears to have found support in the ZMK3,450/US$ area, after depreciating by 16.9% from its May 7 high of ZMK2.950/US$ . The sudden sell-off appears to be the result of international investors cashing in their T-bill holdings because yields fell too low: the return on the 91-day paper fell to 6.1% on May 19. With the current climate of rising US rates and the global 'flight to quality', Zambia's experience chimes with the current trends being seen throughout emerging markets. Indeed, we are most cautious about those countries with large current account deficits, and Zambia, which recorded

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