The kwacha hit a rough patch Tuesday. It slid as much as 6% intraday - the steepest fall in more than three years - before trimming the drop. The currency weakened to 21 per dollar, its lowest since January, then recovered to 19.84 by 10:50 a.m. in London. That made it six down days in a row for what has been this year's top-performing African currency.
Corporate dollar demand picked up, especially in energy, once the government ended the temporary FX waivers granted to energy importers.
Currency swings in commodity economies reach food and fuel prices fast. Market Briefs covers frontier markets free every weekday.
Global tides are running against many emerging markets. For three consecutive weeks, Bloomberg's dollar index has been climbing, while conflict in the Middle East has helped anchor oil prices close to $100 a barrel. Spillovers are widespread: on Monday the Ugandan shilling hit a record low, and the Chilean peso plus the Indian rupee slid as well, leading officials to step in with dollar sales.
Despite the recent setback, Zambian assets have posted solid performance this year. The nation, Africa's second biggest copper producer, has benefited from higher copper prices, and earlier kwacha gains drove local bonds' year-to-date performance to 39%, the best in the world. The takeaway for a regular portfolio: commodities, currencies, and policy shifts can move quickly, and they often show up first in places like Zambia before rippling outward. Keeping an eye on those macro moves can make the ups and downs in your own holdings make a lot more sense.
Dollar demand pressure is a recurring strain across the region. Join Market Briefs free and follow the pressure.
