The depreciation in Zambia’s kwacha may be short-lived as companies convert dollars to pay monthly taxes in Africa’s second-largest copper producer, according to Cavmont Bank.

The currency slid 3.1 percent to 9.80 against the dollar by 1:30 p.m. in Lusaka, the capital. Annual April consumer price inflation eased to 21.8 percent from 22.2 percent in March, the statistics office said in a statement Thursday. Economists expected CPI to be below 22 percent, FNB Zambia said in an e-mailed note.

“Despite its current weakness, the local currency is likely to make a rebound as corporates convert dollars for kwacha to meet month-end obligations,” Lusaka-based Cavmont Bank said.

The kwacha has advanced 13 percent against the dollar since January, making it the world’s best performing currency of 2016, after being the third-worst last year. The currency has benefited from improving prices for copper, which accounts for in excess of 70 percent of Zambian exports, along with cuts to government spending, Mark Bohlund, an economist at Bloomberg Intelligence, said in a note Wednesday.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE