• The market remains tight in terms of FX supply.
• Supply of FOREX mainly coming from the mining sector is sort of coming down.
• The debt restructuring does not seem to be coming to conclusion soon.

Zambian Kwacha has continued to exhibit a trend of depreciation against major global currencies such as the United States dollar. This depreciation trend has been noticed in the past five weeks.
The Kwacha depreciated by 0.49 percent from an average of K18.47 ngwee in April 2203, to an average of K18.56 in May, 2023.
Bank of Zambia Governor Denny Kalyalya, recently attributed the weakening of the local currency mainly to the re-emergence of foreign market pressures.
According to financial market players, delays to restructure the country’s debt restructuring have increased the economy’s unpredictability by creating pressure on the currency and slowing prospects to increase investor confidence.
They have reaffirmed calls on the need to expedite the debt restructuring process by creditors.
And Economist Gerald Soko observes that tight foreign exchange (FX) supply resulting from protracted debt restructuring and low production in the mining sector are the major factors affecting the Kwacha’s performance.
Speaking in an interview with Money FM News, Mr. Soko noted that going into April, there were expectations that the IMF /World Bank Spring meetings, would result in positive news from the debt restructuring deal, but this does not seem to be coming to conclusion soon.
“We saw an appreciation but starting from the fourth week of April, we have gone back to the usual, so the Kwacha is depreciating, we have seen it depreciate in the last five weeks. I think of course the issue is the market remains tight in terms of FX supply, at the moment the two key issues. Remember that going into April, the expectation that after the IMF /World Bank Spring meetings, we were going to get positive news from the debt restructuring deal, but of course it looks like we still have a long way to go and that hindrance is still in place. So one, it is the debt restructuring itself which does not seem to be coming to conclusion soon.”
He added that negative sentiments resulting from the fact that debt restructuring efforts are delaying as well as low supply of foreign exchange mainly from the mining sector which gives Zambia over 70 percent of FOREX earnings, are affecting the local unit.
“And so we are dealing with two things, negative sentiments coming from the fact that debt restructuring efforts are delaying and giving us the outcomes that we are looking for, but also in terms of fundamentals such as supply of FOREX mainly coming from the mining sector is sort of coming down.”
“So I think that those are the two key issues driving the performance of the currency at the moment, the debt issue which remains unresolved but also the mining sector which gives us over 70 percent of FOREX earnings is underperforming at the moment considering that the issue at Mopani and Konkola Copper Mines remain unresolved,” he noted.
Most commercial banks have quoted the currency at K19.91 and K20.30 on the bid and offer respectively.