Foreign investors are scrambling to buy up Zambia’s debts as the market heralds an extraordinary economic recovery under new President Hakainde Hichilema.

On Friday, bids for domestic currency bonds were more than eight times the amount offered at the last auction. In all, the Bank of Zambia raised K 2.5 billion ($157 million), receiving bids for a record K12.5 billion. Yields fell across the curve, with five-year notes dropping 8 per cent to 25%.

This appreciation in the country’s currency could mean that price inflation will begin to ease in the coming months. Zambia imports everything from fuel to fertiliser so currency volatility has a particularly strong impact on inflation. A stronger Kwacha will therefore make essential goods and services more affordable for ordinary Zambians.

Mweemba Mwiinga, chief investment officer at African Life Financial Services Ltd. described there being a “sense of euphoria” in Lusaka, with investors holding on to the expectation that “inflation willl come down”.

“There’s a bit of FOMO [fear of missing out] as well,” he said.

The rebound in the Kwacha has largely been attributed to the election of Hakainde Hichilema on August 16th, with the currency surging 21% against the dollar since HH was made president. Investors are betting he will be able to revive Zambia’s economy after the country became Africa’s first pandemic-era debt defaulter last year.

“It’s not having copper underground that makes you rich,” HH said on Sunday. “What makes you rich is the stuff to be mined out and sold, profits made, taxes paid, jobs created.”

Newly-appointed finance minister Situmbeko Musokotwane is expected to deliver a new budget by late October. His plan will need to find a balance between appeasing voters and winning favour with the IMF. He also faces tough debt-restructuring talks with creditors.

“He has made a lot of positive pronouncements, but obviously the proof of the pudding will be in how some of these things will be implemented,” Mwiinga told Bloomberg News. “The key thing to watch will be the budget.”

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