The kwacha weakened to the lowest since May 30 and headed for a record amid concern about President Edgar Lungu’s health after he collapsed at a public event three days ago. The country’s dollar bonds due April 2024 fell for a third day after the presidency said Lungu would seek treatment abroad for a narrowing of his oesophagus, which caused low blood sugar levels.
The kwacha retreated for a fifth consecutive day, weakening to K7.2 per dollar by on Zambia National Commercial Bank rates. Eurobond yields rose 1 basis point to 7.17 percent, the highest in a week on a closing basis. “The sudden illness of yet another Zambian head of state – – coming as it does on the back of market uncertainties, mining debates and potential upheavals at the central bank while the currency slides – is bound to create jitters and cause some concern,” said Gary van Staden, a political analyst at NKC Independent Economists in Paarl, South Africa.told Bloomberg
Reuters adds that concerns over Zambia’s mainstay copper business, which remains at risk after government hiked mining royalties in January, has also dampened the outlook for the kwacha. The higher royalties triggered a dispute with companies such as Glencore and Vedanta Resources.