Zambia’s kwacha fell by the most in more than six years, reaching a record low against the dollar, as a slump in copper prices and an electricity shortage weigh on the economy.
The currency of Africa’s second-biggest copper producer retreated as much as 5.5 percent to 9.4961 per dollar, the biggest drop since May 2009, according to data compiled by Bloomberg. It was 3.5 percent weaker at 9.3153 by 3:34 p.m. in Lusaka, the capital, bringing its decline this quarter to 24 percent.
“The weakness is obviously self-perpetuating as would-be sellers hold off for a higher price while importers rush to buy, fearing worse levels,” First National Bank Zambia, a unit of Johannesburg-based FirstRand Ltd., said in an e-mailed note to clients on Wednesday. “Demand is further increased by everyday users wishing to preserve value by converting their kwacha to dollars.”
Copper prices near six-year lows have hurt the currency of Zambia, which relies on the metal for more than 70 percent of exports, at a time when a power crisis is reducing mining output. The currency has depreciated 32 percent since January, making it the world’s worst performer after the Belarus ruble.