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Economist attributes Kwacha gains to positive sentiments around debt restructuring

• The key factors have been the positive sentiments coming out of the government talks with Creditors Committee.
• They are committed to give financial guarantees to enable government restructure its debt.
• This has given a boost to market sentiments and that is driving Kwacha’s appreciation.

An Economist has attributed the appreciation of the Kwacha to positive sentiments coming out of government talks with the Creditors Committee who have committed to restructure the country’s debt.
Speaking in an interview, Dr. Patrick Chileshe says the Committee’s commitment to give financial guarantees to enable government restructure its debt, and also pave way for accessing the International Monetary Fund (IMF) deal, is driving the appreciation of the Kwacha against the United States dollar.
Dr. Chileshe said the local unit is expected to remain stable for the next few weeks, as the country waits for the formal agreement with the IMF and the program being finalized.
“The past week, the key factors have been the positive sentiments coming out of the government talks with Creditors Committee who have indicated that they are committed to restructure our debt. They are committed to give financial guarantees to enable government restructure its debt, and also pave the way for accessing the IMF deal and that has given a boost to market sentiments and that is driving the appreciation in terms of the Kwacha against major convertible currencies,” Dr. Chileshe observed.
He added that the expected average appreciation of the local currency is around K15: 60 Ngwee to K15:80 Ngwee range.
“The currency is expected to remain stable for the next few weeks even a month, as we await the formal agreement with the IMF and the program kicking in. Thereafter we might see the Kwacha appreciating again, our expected average is around 15: 60 to 15:80 range that it might settle at by the close of the year,” he added.
The Kwacha has advanced to its strongest level since September 2021, after official creditors agreed to provide financing assurances the nation needs to secure final approval from the International Monetary Fund (IMF) for a US$1.4 billion bailout.

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