The Kwacha depreciated by 2.62 percent last week, closing at K23.15 per USD compared to K22.56 per American dollar the previous week, Zambia Extractive Industries Transparency Initiative (ZEITI) reports.
Zambia has been severely affected by an El Niño-induced drought of late, which has led to decreased agricultural production and increased the need for food imports.
The shortage of water in the southern African nation, which heavily relies on hydropower for electricity generation, has also impacted mining output.
Moreover, according to some reports “the Bank of Zambia’s reserves have not been increasing, which is also a concern and weighs on investor sentiment towards Zambia.
Apparently, Standard & Poor’s (S&P), a global rating agency has upgraded Zambia’s credit rating, though the upgrade is minimal and the country still remains in what is called junk status.
Analysts say any upgrade is welcome and a notable development for Zambia, however they point out that one thing the country should not forget is that the upgrade is still within junk status.
Finance Minister Dr. Situmbeko Musokotwane and his team have been working on this for over four years now and critics say at this pace, Zambia still has a long way to go to cross the redline to make the country be viewed at investment grade.