Zambia Kwacha jumps most in seven years on debt revamp optimism
Zambia’s currency advanced the most in seven years on expectations the southern African nation is on the verge of reaching a deal with its official creditors on restructuring its debt.
The kwacha rose almost 12% to as high as 17.425 per dollar, breaking above its 200-day moving average. The country’s dollar bond due July 2027 was the best performer among emerging-market peers.
The gains follow news that Zambia and its official creditors have made significant progress toward reaching a debt deal and are ironing out the final details, according to an official at the Paris Club. Creditors are likely to announce an offer at the summit for a New Global Financing Pact in Paris planned for June 22-23.
A deal will allow the International Monetary Fund to disburse $188 million to the distressed nation which has the highest sovereign-risk premium in Africa, according to JPMorgan Chase & Co. data. Zambia has been in talks with creditors since 2020 to restructure its debt, imperiling economic growth.
A resolution of Zambia’s debt crisis is seen as a test for how the Group of 20’s Common Framework will help revamp low-income countries’ unaffordable debts and how China coordinates relief with traditional Paris Club lenders as well as global bondholders.
