The Bank of Zambia has implemented measures to address the sharp depreciation of the kwacha, one of the world’s poorest-performing currencies in recent times. Since the beginning of the second half of the year, the kwacha has experienced a significant decline of over 20% against the US dollar.
Various factors have contributed to this downturn. Declining metal prices and production levels have had a notable impact, exacerbating the economic challenges faced by the nation. Furthermore, delays in Zambia’s efforts to restructure its external sovereign debt, which amounts to over $10 billion, have added to the strain.
In a bid to stabilise the currency and shore up economic stability, the central bank has opted to raise the deposit ratio required of commercial banks. This move is intended to manage liquidity within the banking sector, providing a buffer against further currency depreciation.
Additionally, the Zambian government is forging ahead with plans to transfer control of the Konkola copper operations to Vedanta. This strategic move signals an important development in the country’s mining sector, which plays a crucial role in Zambia’s economic landscape.
As Zambia navigates these economic challenges, the actions taken by the central bank and the government’s initiatives in the mining sector will be pivotal in steering the nation towards a path of stability and sustainable growth. These measures reflect a concerted effort to address the pressing issues affecting the country’s economy and currency.