Jan. 31 (Bloomberg) -- Zambia’s kwacha declined to a 3 1/2-year low against the dollar as companies bought foreign currency to pay for imports.
The kwacha dropped as much as 1.5 percent and traded 0.9 percent weaker at 5.40 a dollar as of 3:01 p.m. in the capital, Lusaka. The currency has weakened 3.3 percent since Jan. 25. Zambia rebased the kwacha on Jan. 1, removing three zeros.
Zambian companies are buying foreign currency to replenish inventories depleted during December trading, said Michael Keenan, a sub-Saharan Africa strategist at Absa Group Ltd. The currency has declined 3.9 percent this year, the sixth-worst performance out of 24 African currencies monitored by Bloomberg.
“There is some seasonal corporate demand for dollars,” he said by phone from Johannesburg. “Companies are buying currency after the quiet season” in December.
The Bank of Zambia left its benchmark policy rate unchanged today at 9.25 percent.
To contact the reporter on this story: Robert Brand in Cape Town at firstname.lastname@example.org
To contact the editor responsible for this story: Vernon Wessels at email@example.com