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The Zambian Kwacha is predicted to continue its poor run if the debt restructuring negotiations are not concluded soon.
This is according to First National Bank (FNB) Zambia in its agribusiness monthly report published on Wednesday.
It stated that a key trigger would be the developments around the debt restructuring negotiations.
A closure will, however, provide a positive signal to the market if successfully completed in the coming weeks.
“In the absence of this event, we expect the Kwacha to start trading under pressure as demand for foreign currency starts to outstrip supply,” the bank indicated.
Read more: Money Report: Kwacha depreciates to K17.85, as liquidity levels rise to K2,513.66 million
The Kwacha had recouped most of its recent losses against the United States dollar, appreciating by 16.5 percent since the turn of the month of April.
This comes after a 27.5 percent depreciation since September 2022, which saw the local move from a rate of 15.30 to 21.175 at the end of March 2023.
The appreciation was on the back of seasonal support from the Bank of Zambia, which aided in abating the growing mismatch between demand and supply on the domestic market.
This support triggered a rally in the market as sellers of foreign currency quickly offloaded their positions and buyers held off on purchases in anticipation of a lower rate.
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