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Zambia’s kwacha gains 3 pct on possible mining tax review
LUSAKA (Reuters) – Zambia’s kwacha gained more than 3 percent against the dollar on Friday, boosted by expectations of changes to the copper producer’s mining royalty regime and reduced liquidity after a rise in statutory reserves.
By 1429 GMT, the kwacha was trading at 7.2000 against the dollar, 3.16 percent firmer from its closing level on Thursday.”There is some correction on the kwacha after it over shot weaker yesterday,” said Zambia analyst Irmgard Erasmus of NKC Independent Analysts.
“The revision of Zambia’s mining tax regime is due soon and we are quite optimistic that things will look better for the mining sector,” Erasmus added.
Zambia raised its mining royalties in January, sparking a row with foreign resources firms. President Edgar Lungu called for a review on the royalties by April 8, and the proposed changes are expected to be revealed on Monday.
Zambia’s central bank also raised the amount of money that commercial banks are required to deposit with it to 18 percent from 14 percent to curb the kwacha’s volatility.
“The reserve ratio that kicked in on the 8th of April has reduced liquidity on the market, effectively minimising demand for the dollar,” said a currency trader in Zambia.