Zambian Kwacha Retreats to Lowest in Year After Sata’s Victory
Zambia’s kwacha declined to its lowest level in more than a year versus the dollar on concern Michael Sata’s election victory will be followed by higher taxes on corporations including copper mines.
The kwacha retreated as much as 3.4 percent to 5,160 per dollar, its weakest level since July 1 last year. It traded at 5,158 per dollar as of 12:20 p.m. in Lusaka.
Sata defeated incumbent President Rupiah Banda with a promise to create jobs and spread wealth by extracting more benefits from a rapidly expanding copper industry. The Southern African country is Africa’s biggest producer of the metal.
Sata’s election manifesto “seems to favor increased taxation of the corporate sector,” Leon Myburgh, a Johannesburg-based analyst at Citigroup Inc., said in e-mailed comments. “The financial markets are likely to react with some nervousness and we have already seen the kwacha depreciate.”
Zambia may become the world’s fifth-largest copper-miner by 2013, Sophie Chung, an analyst at Wood Mackenzie’s metals research unit, Brook Hunt, said in July. Production may more than double to 1.44 million metric tons by 2015, Brook Hunt said. Producers including First Quantum Minerals Ltd. (FQM) and Vale SA are planning more than $6 billion in investment.
To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net
Rate this Page