Zambian Kwacha falls over size of country’s debt, aid freeze

LUSAKA, Sept 19 (Reuters) – Zambia’s kwacha lost more than 1 percent on Wednesday, hit by investor worries about the size of nation’s debt and an aid freeze by Britain and Finland over suspicion that social welfare funds may have been misused.

The currency of Africa’s No.2 copper producer fell as much as 1.6 percent to 11.1800 per dollar on Wednesday from a close of 11.0000 per dollar on Tuesday, Reuters data showed.

“Zambia’s debt issues continue to create anxiety among investors. In addition, emerging market currencies have been generally weakening,” one senior commercial bank trader said.

Zambia’s external debt rose to $9.37 billion by the end of June from $8.7 billion in December, the finance ministry said in August, a week after the International Monetary Fund (IMF) raised concerns over country’s high borrowing.

Britain and Finland have frozen funding to Zambia on suspicion that $4 million they channelled into a social welfare scheme may have been misused, the Zambian presidency said on Tuesday.

“One can speculate that players are buying dollars to keep their money in hard currency after news that donors have frozen aid,” independent financial analyst Maambo Hamaundu said.

Associated Links

  • IMF
  • ThomsonReuters
  • Geography of Africa
  • Africa
  • Zambia
  • Welfare
  • Kwacha

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