“Many entities are likely to use the dollar as the currency of choice for transactions, thereby putting more pressure on the demand side,” said analyst Peter Sitamulaho of the local Bonds and Derivatives Exchange.
“The kwacha is afflicted by lack of price transparency, lack of liquidity, too few market participants dominated by less than six banks, the majority being international banks,” he added.
The kwacha would remain on the back foot as a resolution to global and domestic economic concerns were out of sight, Zambia National Commercial Bank said in a note.
In addition to weak global prices, Zambian mines have also been hit by a power crunch, with one copper producer, China’s NFC Mining, shutting down some of its operations at local operations as a result, according to a union.
Zambia’s Konkola Copper Mines (KCM) owned by London-listed Vedanta Resources Plc has asked 133 employees to stay away from work on full pay while the company undertakes a review of the operations.
The government has said it plans to build 17 hydro power generation plants and a thermal plant by 2030, which together will add over 4,000 MW to power supply.