Zambia moves to halt world’s worst currency fall after Argentina
Zambia’s kwacha has plunged 21% against the dollar since the end of June, with only Argentina’s peso performing worse globally, according to data compiled by Bloomberg
Zambia’s central bank raised the ratio of deposits that commercial lenders must hold in a bid to reverse a slide in the world’s worst-performing currency after Argentina’s peso.
The Bank of Zambia will increase the statutory reserve ratio requirement for local- and foreign-currency deposits by 3 percentage points to 14.5% with effect from Nov. 13, it said in a circular on Monday. The move is aimed at relieving “persistent foreign-exchange market pressure” and reining in inflation, it said.
Zambia’s kwacha has plunged 21% against the dollar since the end of June, with only Argentina’s peso performing worse globally, according to data compiled by Bloomberg.
The copper-producing nation’s currency has taken strain as metal prices and production have dropped, while efforts to restructure more than $10 billion of external sovereign debt have dragged.
Zambian consumer price inflation in October accelerated 12.6% — the fastest pace in almost two years — driven in part by the kwacha’s depreciation. Zambia imports products from fuel to fertilizer, so prices are heavily impacted by movements in the exchange rate.
