(Bloomberg) — Zambia’s kwacha weakened to head for a record low as President Edgar Lungu said he would travel to South Africa for medical tests after the leader of the continent’s second-biggest copper producer collapsed.
The country’s $1 billion of dollar bonds due April 2024 fell for a third day even as Lungu, 58, said in remarks on Lusaka-based Radio Phoenix that he was “feeling much better.” He fell ill at a public event on March 8 because of low blood sugar levels due to a narrowing of his food pipe, or esophagus, according to a statement on the presidency’s Facebook page. He was treated in a military hospital and released on Monday.
The kwacha retreated a fourth day, weakening 1.6 percent to 7.1250 per dollar by 2:38 p.m. in Lusaka, the capital. Eurobond yields rose four basis points to 7.21 percent, the highest since Feb. 27 on a closing basis.
Lungu came to office in January, winning an election that was held after the October death of President Michael Sata at the age of 77. He was the second Zambian leader to die in office after Levy Mwanawasa in 2008. Lungu is trying to prevent copper-mine closures or retrenchments as he faces a standoff over a new tax system with companies in Africa’s second-biggest producer of the metal.
“The sudden illness of yet another Zambian head of state – – coming as it does on the back of market uncertainties, mining debates and potential upheavals at the central bank while the currency slides — is bound to create jitters and cause some concern,” Gary van Staden, a political analyst at NKC Independent Economists, based in Paarl, South Africa, said in an e-mailed note to clients. Zambian markets were closed for a holiday on Monday.
Lungu replaced central bank Governor Michael Gondwe, who held interest rates at a record high, with a former deputy Denny Kalyalya last month.
The International Monetary Fund will visit Zambia from March 19 to 30 to discuss the country’s economic outlook, Resident Representative Tobias Rasmussen said in reply to e-mailed questions. Zambia’s economy probably expanded at the slowest pace in 12 years in 2014 after mining production was hurt by technical shutdowns, the IMF said on Dec. 18.
Political and social pressures for “loosening fiscal policy” before elections in 2016 are potential risks, the Washington-based lender said.
To contact the reporter on this story: Matthew Hill in Lusaka at [email protected]
To contact the editors responsible for this story: Antony Sguazzin at[email protected] Emily Bowers, Michael Gunn
By Matthew Hill in Lusaka